Ford scraps planned $1.6bn project in Mexico

HOUSTON (ICIS)–US automotive major Ford on Tuesday announced that it is cancelling plans for a new $1.6bn plant in San Luis Potosi, Mexico, and that it will instead expand in Michigan, boosting production of electric vehicles there.

Last year, Ford had said it would invest $1.6bn in Mexico for small-car production to start in 2018, and that all of the company’s small-car production would be leaving US plants, heading to lower-cost Mexico.

In announcing the cancellation, Ford said it would invest $700m to expand its assembly plant in Flat Rock, Michigan, into a factory that will build high-tech autonomous and electric vehicles, creating 700 direct new jobs.

The incremental investment in Flat Rock comes from the $1.6bn that the company previously planned to invest in the new plant in Mexico, it said.

However, Ford added that it would build a “next-generation” of its Focus brand at an existing plant in Hermosillo, Mexico.

The automaker also detailed plans for seven new electric vehicles it plans to introduce in the next five years, including hybrid versions of the F-150 pickup and Mustang in the US, a plug-in hybrid transit custom van in Europe and a fully electric SUV with an expected range of at least 300 miles for customers globally.

“As more and more consumers around the world become interested in electrified vehicles, Ford is committed to being a leader in providing consumers with a broad range of electrified vehicles, services and solutions that make people’s lives better,” said Mark Fields, president and CEO.

“Our investments and expanding lineup reflect our view that global offerings of electrified vehicles will exceed gasoline-powered vehicles within the next 15 years,” Fields added.

Commentators were quick to note that Ford’s move to pull the San Luis Potosi project in Mexico comes as President-elect Donald Trump moves into the White House on 20 January. Trump has criticised US companies that shift production from the US to lower-cost regions.

The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).

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