Ford spikes Mexican plant plan

FORD appears to have bowed to pressure from United States president-elect Donald Trump and cancelled plans for a new plant in Mexico.

Instead, it will invest $US700 million ($A970m) it its existing Flat Rock assembly plant in Michigan to build new full electric and hybrid models due within five years.

However, next-generation Ford Focus production for North America will still be transferred to Mexico where the small car will be built at an existing plant at Hermosillo.

The stunning back-down was announced by Ford president and CEO Mark Fields while unveiling plans for 13 new electric and hybrid models to be built by Ford in the United States by 2020 (see separate story).

The move means that Ford is now likely to be obliged to pay back Mexican government aid for the new plant that is already under construction at San Luis Potosi.

Announced in April 2016, the plant would have cost $US1.6 billion ($A2.22b) and be in operation by 2018.

Instead, the Focus will be slotted into production alongside the Fiesta at Ford’s existing Mexican factory.

In announcing the switch, Ford did not mention Trump threats to impose a 35 per cent tariff on Mexican-built cars imported into the US.

Instead, it said the move would improve company profitability and ensure the financial as well as commercial success of the next-generation Focus.

Later, Mr Fields told reporters the decision was a “vote of confidence” in Trump.

“We’ve made this decision independently on what’s right for Ford, but we look at all the factors,” Mr Fields said. “Our view, we see a more positive US manufacturing business environment under President-elect Trump and the pro-growth policies and proposals he’s talking about.”

The company says the move will make space for “two new iconic products” at the Michigan assembly plant in Wayne, thus safeguarding about 3500 US jobs.

Naturally, American auto unions welcomed the move, with United Auto Workers (UAW) vice president Jimmy Settles hailing it as a victory for the organisation.

“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” he said.

“The men and women of Flat Rock Assembly have shown a great commitment to manufacturing quality products, and we look forward to their continued success with a new generation of high-tech vehicles.”

The investment at Flat Rock will create 700 new jobs over the next four years.

The investment will create a new unit, called the Manufacturing Innovation Centre, to build an all-new full-electric small SUV and a hybrid fully autonomous vehicle for ride-hailing and ride-sharing services.