Ford is investing in a new plant in Mexico’s San Luis Potosi State to produce more small cars, as it wants to cut costs on smaller-margin models.
Rumours over Ford’s plans to build a new facility in Mexico have been around for a while now, with some local officials confirming them back in February. However, Ford has just made the move official and announced a 1.6-billion-dollar investment in a new facility in the central Mexican state of San Luis Potosi, beginning construction this summer. The plant will create 2,800 additional direct jobs by 2020, but Ford did not reveal the vehicles that would be produced there. The new site will play a crucial role in increasing profitability of the company’s small cars, as “Mexico has more competitive labor costs, supplier costs, good logistics, good support from the government,” according to Joe Hinrichs, Ford’s president of the Americas.
As they slowly shift some of their production to Mexico, analysts project that GM, Ford and Fiat Chrysler will build there around 40 percent of their small cars for the North American market, in five years’ time, up from 18 percent in 2014.
Ford’s new car plant is designed to build around 350,000 vehicles annually, according to two local officials familiar with the matter. This will be its fourth largest vehicle manufacturing site for global markets, after the US, China and Germany. The Blue Oval has been manufacturing vehicles in Mexico since 1925 and it currently has 116 dealers throughout the country.