Ford Is Still Moving Small Car Production to Mexico Despite Trump’s Tariff Threats
Ford Motor(F) is moving ahead with plans to shift production of small cars to Mexico from Michigan, while “two very important products” will be built in its U.S. factories, Chief Executive Officer Mark Fields told Reuters on Tuesday.
President-elect Donald Trump has criticized Ford for the decision to shift production of Focus small cars to Mexico in 2018, and said he would consider levying tariffs on Mexican-made Fords. Trump has also said he wants to scrap the North American Free Trade agreement, which also includes Canada, and to build a wall on the U.S.-Mexico border to stop undocumented immigrants.
“We’re going forward with our plan to move production of the Ford Focus to Mexico, and importantly that’s to make room for two very important products we’ll be putting back into Michigan plants,” Fields said in an interview on the sidelines of the Los Angeles Auto Show. “There will be no job impact whatsoever with this move.”
Ford Chairman Bill Ford Jr. said last month he met with Trump. Ford has countered Trump’s criticism, saying the company, founded by his great-grandfather, makes more cars and trucks in the United States than any other automaker.
Fields said with U.S. gasoline prices so low, “it’s very difficult for us to be able to make money on a vehicle produced in the U.S.” in the small car segment. If Ford decided to build the Focus small car line in the United States, and had to raise the price, “we wouldn’t sell the vehicle.”
The group that represents Ford and other major automakers in the U.S. has asked the Trump transition team to review and consider easing the Obama administration’s fuel economy standards, which call for automakers to more than double the fuel efficiency of their fleets to 54.5 miles per gallon by 2025.
Fuel economy and trade “are two separate issues,” Fields said.
Ford also is moving ahead with plans to use factory capacity in other markets to fill gaps in its U.S. lineup. Company executives used the auto show to promote a small sport utility vehicle called the EcoSport that the company plans to ship from India.
“We already have the plants and investment in other parts of the world. It frees us up to make further investments in the U.S.,” Fields said, pointing to the money invested to launch a new SuperDuty pickup at a plant in Kentucky.
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Ford has cautioned investors that it sees demand for cars and light trucks hitting a plateau in the United States. Fields said heading into the last two months of the year “we are seeing a tougher pricing environment.”
“We expect the industry to be about the same as it was last year, probably a little lower on the retail side, and a continuing competitive pricing environment,” Fields said.