Ford To Move Its Compact Car Production Abroad

Focus small cars and the C-Max hybrids will be moved from its Michigan assembly plant near Detroit in 2018.

Ford Motor Company (NYSE:F) has said that it has made plans to move its compact cars (which include Focus small cars and C-Max hybrids) production from its assembly plant in Michigan, located near Detroit, by early to mid-2018. The move highlights the difficulties face by US automakers in building fuel-efficient cars in a profitable manner in the country.

While the Dearborn, Michigan-based automaker did not state that where the production facility for the next generation Focus and C-Max cars will be built, one news agency reported that the company announced plans less than three months ago that it would invest close to $2.5 billion for its engine and transmission plants in Mexico, suggesting that it was meant to serve as a warm-up to the stage when the production facilities move out to the Central American nation. Currently the company manufactures Fiesta small cars and Fusion mid-size sedans.

The announcement comes in the backdrop of Ford entering into talks with executives and leaders of United Auto Workers over a new labor agreement; with the union seeking a wage increase, as well as reversal of healthcare costs rollback. A Ford spokesperson said that the company would go into the negotiations keeping the competitive production needs in mind.

Kristina Adamski, a spokesperson, said that no jobs would be impacted from the move, but coned that the company had cut its production hours and is likely to lay off around 700 workers in the process.

Jimmy Settles, who is the union’s chief liaison officer and Ford’s negotiator, said that he is confident that a new product line will be secured for the Michigan plant, adding that he is hopeful that the facility will remain in full production, even with the pull out of the compact car production overseas. The Michigan Assembly plant, among other 13 Ford factories, has benefited from less than $6 billion in loans that were doled out by the US Department of Energy in 2009.

Ford’s stock price ended the day at $14.48, a gain of more than 1% from the previous week, as investors hail the company’s decision to move its operations for low cost ventures to Mexico. In addition to location, the company is also trying to squeeze the size of the car to meet the needs of budget-tight middle-class population in the US that is seeing a steady decline due to high taxation, which has also hit the bottom lines of companies, especially Ford.

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