Motor Co.â€™s plan announced today to add capacity and build its revamped Fiesta small car in Mexico will push that country past Ontario as the leading North American vehicle assembly region in 2012, Wardâ€™s forecasts.
Mexico this year is projected to speed by Michigan to become the No.2 vehicle assembler, with 2,214,597 units vs. 2,028,303.
And ifachieves its target of boosting production by 500,000 vehicles annually in Mexico within the next four years, the countryâ€™s total output should reach 2,850,000 in 2012, well ahead of Ontarioâ€™s 2,511,270 and Michiganâ€™s 2,198,183, a Wardâ€™s forecast shows.
Fordâ€™s expansion plan includes the launch of the new Fiesta subcompact at its Cuautitlan, Mexico, plant in early 2010.
By 2012, Mexico should account for 18.1% of Fordâ€™s total North American output, Wardâ€™s forecasts, up from 11.7% currently.
With Fordâ€™s added production, Mexico will account for 17.9% of North American output in 2012, compared with Canadaâ€™s 15.8%, according to the Wardâ€™s forecast. In 2008, Mexico is projected to finish with a 15.4% share of North American production, while Ontario will control 15.9%.
Ford says its plan to build the Fiesta subcompact car is just part of a what it claims is the largest investment ever by an auto maker in Mexico. Included in that are plans for output of new global diesel engines for light- and medium-duty trucks at Fordâ€™s Chihuahua Engine Plant, which already makes inline 4-cyl. mills, and launch of a new transmission manufacturing facility in Guanajuato with joint venture-partnerAG.
In all, Ford says the â€śmulti-plant developmentâ€ť represents a $3 billion investment, including local supplier outlays.
Some 4,500 Ford jobs will be created, the auto maker says.
â€śTogether with all direct and indirect employment at suppliers, the moves affect 30,000 jobs in Mexico,â€ť Ford says in a statement.
The auto maker will produce both sedan and hatchback versions of the Fiesta â€“ including the 3-door â€“ in Mexico for the North American market.
Jim Farley, group vice president-marketing and communications, told Wardâ€™s in March Ford soon would make a decision whether to offer the European-market 3-door hatchback in the U.S.
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Ford had only confirmed the sedan variant prior to todayâ€™s announcement, but now says reaction from consumers at the North American International Auto Show in January, where the 3-door was shown, has convinced it there is a sizable market in the U.S. for the car.
North America will get the Fiesta after Europe in early 2010. Production of the European Fiesta begins this fall at Fordâ€™s plant in Cologne, Germany, while its Valencia, Spain, facility will add capacity in 2009.
Hermosillo, Mexico, where Ford already builds the Ford Fusion, Mercury Milan and Lincoln MKZ midsize sedans, once had been expected to become the production site for the Fiesta, as well. At an earlier juncture, Ford indicated it would build an all-new plant in North America for the B-cars, but backed off those plans due to financial constraints.
Cuautitlan opened in 1964 and is one of Fordâ€™s oldest existing plants. It builds F-Series pickups and Ikon and current-generation Fiesta small cars for the Mexican market. Ford says it will end truck production at the plant and import pickups into Mexico from the U.S.
Ford had hinted Cuautitlan would close unless a new product could be found for the plant. Sources in Mexico told Wardâ€™s in 2003 that Ford had made a commitment to maintain operations only until 2008. The development of Cuautitlanâ€™s local supply base was viewed as critical to keeping the plant open, Wardâ€™s was told.
â€śFord is absolutely committed to leveraging our global assets to accelerate the shift to more fuel-efficient small cars and powertrain technologies that people really want and value,â€ť Ford President and CEO Alan Mulally says in a statement regarding the new expansion program. â€śOur investments in these facilities in Mexico are part of our plan to further realign our manufacturing capacity in line with the introduction of more small cars and crossovers.â€ť
Mulally joined Mexican President Felipe Calderon Hinojosa and other dignitaries today in Mexico City for the announcements.
Though not entirely unexpected, Fordâ€™s decision to build the Fiesta in Mexico is likely to be a bitter pill for the United Auto Workers union. During contract negotiations last year, the union made major concessions to Ford, including the institution of a 2-tier wage that would make building cars in the U.S. more cost-effective, in return for new product investments and job security.
The UAW also agreed to a broader attrition program. Ford offered buyouts and early retirement packages to all 54,000 of its U.S. hourly workers in March. Since 2005, Ford has shed 34,000 hourly jobs as part of its restructuring.
â€śIt ainâ€™t good news,â€ť says UAW Local 900 Vice President Kell Quantz, whose local represents members at Fordâ€™s Michigan Truck and Wayne assembly plants in Wayne, MI. Phone calls seeking comment from officials at UAW headquarters in Detroit were not returned.
â€śDuring the negotations with the UAW we were very clear where the Fiesta was going to be built,â€ť says Joe Hinrichs, group vice president-global manufacturing, adding cost was a prime consideration for choosing Mexico.
Ford plans additional job cuts on the salary side of its business, saying Wednesday it would eliminate 12% of its 24,000 white-collar workers in the U.S., Canada and Mexico.
The news also comes on the heels of an announcement fromCorp. that 19,000 of its 74,000 hourly workers will take its latest buyout offer. GM has shed 53,000 employees from its hourly workforce since its massive restructuring began two years ago. Parts supplier Mfg. & Holdings Inc., another major longtime union stronghold, reached a labor agreement last week that would trim 2,000 well-paying, hourly jobs from its payroll.
â€“ with James M. Amend, Diane Elnick and Byron Pope