Ford says it has a better idea than building the Focus in Mexico–make it in China instead.
The automaker says it will start producing the small car in China in 2019, and will export the vehicle to the U.S. In January, the company canceled plans to build all of its Focus models at a factory in Mexico. Global Operations President Joe Hinrichs says the move to China will save Ford about $1 billion.
So what’s Ford’s angle? Paul Eisenstein publishes The Detroit Bureau, an automotive industry news web site. He says the automaker appears to be consolidating its operations worldwide. He also says Ford wants to spend less money making a car that doesn’t sell very well.
“The Focus has been losing a lot of ground, particularly in the United States, where its reputation has been sullied,” Eisenstein says, citing quality issues. “And, in general, the market for small cars has been shrinking as more and more Americans are moving to crossovers and sport utility vehicles.”
Ford says moving Focus production to China will not cost American factory jobs. Workers who build the Focus at the Michigan Assembly Plant in Wayne will be needed to make two new models, the Ranger pickup truck and the Bronco SUV. Eisenstein says despite the vehicle’s sluggish sales, Ford is not giving up on the small car segment.
“For one thing, there are corporate average fuel economy standards to be met,” Eisenstein says. “And, of course, we never know where a market will shift. So if the market were to see a big surge in gas prices, would we see small cars start to come back?”
Ford will not be the first U.S. car company to make vehicles in China and export them to the states. But Eisenstein says this could open up the American market for Chinese-made cars and trucks.
“This will be the first time that we see something that is more mainstream come in from China,” Eisenstein says. “It could usher in an era where we’ll start seeing even more products imported from China in the next few years.”
But will Americans buy cars made in China? Ford says its research shows they will. The automaker says consumers are more concerned about how well a vehicle is made than where it’s made. One American who may care where cars come from is President Donald Trump. In the past, he has threatened to levy an import tax on Ford and other companies that sell foreign-made products to U.S. consumers. The administration’s response to Ford’s China announcement was more measured. The Detroit News quoted Commerce Secretary Wilbur Ross, who said “the Ford decision shows how flexible multinational companies are in terms of geography.” Ross says he believes more companies will begin to locate their facilities in the U.S. as the president’s economic policies take hold.
Click on the audio player to hear Paul Eisenstein’s conversation with WDET’s Pat Batcheller.