Ford cancels $1.6B small car plant planned for Mexico, redirects investment to U.S.

With pressure mounting on manufacturers to keep jobs in U.S., automaker backtracks, announces $700 million investment in Michigan assembly plant, creating 700 jobs

FLAT ROCK, Mich.—Ford Motor Co. has cancelled a US$1.6 billion small car manufacturing plant planned for San Luis Potosi, Mexico.

The automaker said it will redirect close to half of the funds to upgrading its Flat Rock Assembly Plant. The $700 million investment in the Michigan facility will create 700 jobs at a time automakers and other major American manufacturer have come under fire for relocating operations south of the border or overseas.

The announcement coincided with a President-elect Donald Trump Tweet that criticized General Motors for producing the Chevrolet Cruze south of the border—a claim the Ford competitor largely rejected.

Ford’s San Luis Potosi plant was expected to create about 2,800 jobs in the central Mexican city.

Despite the change of plans, Ford still intends to shift production of its the next-generation Focus to Mexico.

The move was an election campaign flash point, with Trump continually criticizing the company for potential job losses—though Ford maintained new car programs for its U.S. plants would mean no U.S. jobs would be lost. After the election in November the company reaffirmed its plans to move small car production out of the U.S.

While Ford did not indicate Trump had any role in the $1.6 billion change of course in a statement released Jan. 3, Mark Fields, the company’s president and CEO said Ford is “encouraged by the pro-growth policies” Trump and the new Congress have committed to.

“We believe that these tax and regulatory reforms are critically important to boost U.S. competitiveness and, of course, drive a resurgence in American manufacturing and high-tech innovation,” Fields said at a press conference in Flat Rock.

The automaker said it will assemble the Focus compact at its existing plant in Hermosillo, Mexico, which currently builds the Ford Fusion and Lincoln MKZ.

To make up for the loss of the Focus program, Ford intends to build two “new iconic products” at the Michigan Assembly Plant in Wayne, Mich. It released no further specifics about what new vehicles are destined for the Detroit-area plant, but said the shift will safeguard the plant’s 3,500 workers.

The $700 million Flat Rock investment will support a steering-wheel-less hybrid autonomous vehicle Ford plans to launch in 2021.

Meanwhile, Ford confirmed more than half a dozen new electric vehicles, including hybrid versions of its F-150 pickup and Mustang.