Ford to Expand Vietnam Production Capacity

Ford Motor Co. will invest $10 million to expand production at its Haiduong, Vietnam, assembly plant, increasing annual capacity by 35%.

The investment will make Ford’s Vietnam operations one of the largest among the country’s Foreign Direct Investment auto makers, Ford says.

“This additional investment highlights the growing significance of Vietnam in our continued expansion and overall strategy for the Asia/Pacific and Africa region,” David Alden, president of Ford ASEAN (Association of Southeast Asian Nations), says in a statement. “We’re very optimistic about Ford’s long-term potential in Vietnam.

“Our Vietnam strategy is aligned with our resources and operations in the region and will allow us to continue delivering high-quality Ford products that are built for ASEAN and, specifically, Vietnamese customers.”

In 2007, Ford Vietnam posted record sales of 5,975 units, a 165% increase over like-2006, the auto maker says.

The expanded production capacity of 9,500 units is slated to go online by the middle of the year, Ford says, noting the Haiduong plan is highly flexible, allowing for production to be adjusted based on demand.

The Haiduong facility currently assembles the Ford Mondeo and Focus passenger cars, Everest SUV, Escape cross/utility vehicle, Ranger pickup and Transit van.

Ford Vietnam to increase production of Everest SUV and other key vehicles in region.

Ford expects to add some 130 jobs with the expansion, increasing its overall direct and indirect employment in Vietnam to more than 4,500 people, including its locally based supply network.

Ford Vietnam also plans to expand its network of 22 dealerships and outlets this year, the auto maker says.

Ford Motor Co. established operations in Vietnam in 1995 with an initial investment of $100 million. Since then, it has contributed nearly $250 million in taxes, making it one of the largest investors in the country. Ford in Vietnam competes against Toyota Motor Corp., GM Daewoo Auto & Technology Co. and Honda Motor Co. Ltd.

Ford’s investment in Vietnam comes against some economic headwinds, as the country’s economic growth in the first quarter slowed to 7.4% from 7.7% year-ago. In addition, the Vietnamese government has lowered its full-year growth target to 7.5% from an initial goal of 8.5%-9%, Reuters says.

Despite the gloomy economic outlook, Ford Vietnam General Director Michael Pease tells the news service the auto maker remains “very confident in the first-half performance of the industry in Vietnam.

“In the first two months of the year, we saw very strong year-on-year growth, and we are confident this growth will continue in the second quarter,” Pease says. “For the second half of the year the economic outlook is a little less clear.”

In January and February, Ford Vietnam sold 1,345 units, up from 713 in like-2007, while the entire Vietnamese auto industry tallied 21,004 vehicles, Reuters says.

“Overall we see 2008 growing, and we remain very confident in the medium- and long-term outlook of the Vietnam auto industry,” Pease says.