Ford is shifting production of its next-generation Focus from Mexico to China, planning to import the small car to the United States.
While other U.S. companies such as Apple have been manufacturing products in China, Ford's decision to source the Focus from the country in East Asia is likely to draw more attention than the others. That's because this marks the first time that the carmaker will make a vehicle in China targeted at U.S. consumers.
Ford's Financial Step
According to Ford, this move entails $1 billion worth of savings compared with the original $1.8 billion arrangement to manufacture the Focus in San Luis Potosi, Mexico, which was scrapped in January due to President Trump's repeated criticism.
The total figure includes the $500 million savings that was announced when the company canceled the Mexico plant.
"Finding a more cost-effective way to deliver the next Focus program in North America is a better plan, allowing us to redeploy the money we save into areas of growth for the company — especially sport utilities, commercial vehicles, performance vehicles as well as mobility, autonomous vehicles and electrified vehicles," Joe Hinrichs, executive vice president and president of global operations of Ford, said.
Ford is expected to begin production sometime during the second half of 2019, and most of the new U.S. models of the Focus will initially come from China, while more variants from Europe are said to come later.
US Workers Won't Lose Jobs
Ford makes it clear that there won't be layoffs for U.S. workers in light of the new production plan for the Focus, saying that the Michigan Assembly Plant will continue manufacturing until mid-2018.
The company intends to outfit the plant to manufacture the midsized Ranger pickup truck in late 2018 and the midsized Bronco SUV in 2020.
Ford To Export Vehicles To China
Ford estimates that it will export 80,000 vehicles to China this 2017, including the new Lincoln Navigator SUV.
The company has made a $900 million investment to upgrade its Kentucky Truck Plant, which will manufacture the new Expedition and Lincoln Navigator, securing 1,000 jobs at the factory.
"Large SUVs are attracting a new generation around the world — and we're finding new ways to deliver the capability, versatility and technology that customers around the world really want with our all-new Ford Expedition and Lincoln Navigator," Hinrichs said.
The Bottom Line
Consumers in the United States can expect to see more Chinese-made cars because of Ford's plans to shift the production of the new Focus from Mexico to China. However, whether or not Americans are ready for them is unclear.
It should be pointed out that this is the first big investment move of the company's CEO Jim Hackett, who replaced Mark Fields back in May.
Ford is currently the second largest carmaker in the United States, following behind General Motors. On that note, it's also worth mentioning that Tesla recently passed BMW as the fourth most valuable car company in the world.