Turning small cars profitable in the U.S. is not an easy task and Ford Motor Co. is here to stand for that. The automaker announced that its Michigan factory which assembles the small Ford Focus and the C-Max wagon will end production of these vehicles in 2018, as a new setback for the small cars market in the U.S. led to the carmaker moving the production of the Focus outside of the U.S.
The switch to abroad perspectives might prevent the United Auto Workers (UAW) union from demanding wage increases in the upcoming contract negotiations. Joining the small car profitability struggle, General Motors Co. and Fiat Chrysler Automobiles are also having a hard time alongside Ford to keep up with the Asian auto markets that have lower costs and show the advantage of weaker currencies compared to the U.S. dollar.
While small cars like the Focus deliver lower profit margins than the pickup trucks and sport-utility vehicles, they are relevant in making the car makers fulfill the strict fuel economy mandates. Carmakers have won concession from the UAW before and after the financial crisis as to lower labor costs, which led to a return of U.S. small car production. This is how GM managed to manufacture the subcompact Chevrolet Sonic and Ford its Focus, both in Michigan.
Ford’s Assembly Plant in Michigan has 4,400 workers and builds gasoline, electric and hybrid versions of the small Ford Focus and the C-Max wagon. It previously built trucks and SUVs at the same plant but decided to shift to the smaller vehicles due to a drop in the price of gasoline, once reaching $4 per gallon. It is uncertain at the moment where Ford will produce the next generation of U.S. car models.
By Gabriela Florea