Ford Motor Company announced on Thursday July, 9th it will move production of the Focus and C-Max small cars from its Michigan Assembly Plant to Mexico in 2018, with UAW officials saying they were told the work will leave the U.S..
The company’s decision sets a potentially combative tone just days before contract talks are scheduled to begin and runs counter to Ford’s normal approach to negotiations, which is to emphasize its ability to cooperate with the union. The UAW formally opens negotiations with GM on Monday, Fiat Chrysler Automobiles on Tuesday and Ford the following week.
“It’s very, very unusual,” UAW Vice President Jimmy Settles told the Free Press, adding that workers were upset when they were briefed on the news on Thursday. “You never feel good about that kind of information. But I am very, very confident that there will be a replacement product that we will secure for the plant.”
Industry analyst Dave Sullivan of AutoPacific called it a “a power move before negotiations start … Before today, Ford didn’t really have anything to negotiate on; the UAW had the upper hand. Now Ford has wiggle room to negotiate for jobs and products.”
Ford spokeswoman Kristina Adamski declined to say where Ford plans to relocate the manufacturing, and said the site choice will be based on where the cars can be competitively produced.
Mexico seems a likely choice, with lower wage costs than Canada or the U.S, and even southern states. Ford has also invested in new plants in the country,lately.
Ford’s move also comes as a host of automakers, including Ford, are building new plants in Mexico instead of in the U.S. and raises questions about which products could replace the Focus — a car that symbolized Ford’s transformation in 2011 from a company dependent on truck sales to one aimed at building better passenger cars for a global market.
Ford insists the Wayne plant, which employs 4,000, will not close. But Adamski would not provide details of any new products being planned for the plant. The company makes the Focus, Focus ST, Focus Electric, C-Max hybrid and C-Max Energi plug-in hybrid at the plant.
“We will move production of the next-generation Ford Focus and C-MAX, which currently are built at Michigan Assembly Plant, beginning in 2018,” the company said in a statement. “We actively are pursuing future vehicle alternatives to produce at Michigan Assembly and will discuss this issue with UAW leadership as part of the upcoming negotiations.”
The decision prompted an immediate response Thursday from Settles, who issued a statement on the UAW Ford Department’s Twitter account under the headline: “Message from UAW VP Jimmy Settles regarding Ford’s announcement to move Focus and C-MAX from MAP TO Mexico by 2018.”
Settles told the Free Press that Ford said it would move production of the vehicles “outside of the U.S.” but did not directly say Mexico.
He said a new goal in contract talks is to win a future product for the Wayne plant that would preserve or add jobs.
“We are just going to get it done,” Settles said.
Art Schwartz, President at Labor and Economics Associates, said Ford’s move underscores the importance of the investment decisions that automakers make.
In 2011, the UAW won product and investment commitments that guaranteed the creation of 20,000 jobs.
“In 2007 and 2011, product guarantees and jobs were a big issue, and I am sure they will be again in 2015,” Schwartz said. “I am sure the UAW is very worried about all of the investment that going to Mexico.”
Ford builds the smaller Fiesta subcompact car in Cuautitlan, Mexico. Its sales have not been strong and there are persistent rumors that Fiesta assembly will be consolidated outside North America and the cars exported back to the U.S. in the future.
As for possible vehicles to fill Michigan Assembly, Ford currently imports the popular Transit Connect from Europe and could be considering North American assembly. Other possibilities include a gasoline-engine version of the C-Max, which is sold in Europe while only a hybrid is sold here. And Lincoln is expected to add compact luxury car to its lineup that could be sourced from the Michigan plant. Ford also could use additional capacity to build more Escapes.
Smaller cars going south
Increasingly, North America is being divided when it comes to manufacturing with larger and more expensive vehicles produced in the north and smaller less profitable vehicles assembled in Mexico and the southern states.
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