Jim Hackett Agrees Not To Build Ford Focus In Mexico. Will Build It In China Instead

Remember during the 2016 when Donald Trump was lambasting Ford for saying it would build the Focus in Mexico? That’s when the fat loser with the world’s worst comb over first threatened to slap a 35% import tariff on any cars made in Mexico for sale in the US. Former Ford CEO Mark Fields made a big show of standing up to Trump by announcing the Focus would continue to be made in America by American workers who pledge allegiance to the flag every morning before work.

ford focus

Good News, Bad News

Now Fields is gone and new CEO Jim Hackett has good news and bad news for the Trumpenator. First the good news. Ford has decided not to move production of the Focus — its second largest selling sedan in America — to Mexico. Now for the bad news. Ford says it will move production to Chongqing, China and import the cars from there.

So far, The Donald has not made a peep — or Tweet — of protest. Wilbur Ross, Trump’s secretary of  commerce, told the press Ford’s plan “shows how flexible multinational companies are in terms of geography.” He added that the administration expects that flexibility to go both ways.

“I believe that as President Trump’s policies and reforms take hold, more companies will begin to locate their facilities in the U.S. as several German and Japanese automakers already have,” he said. Those would be the same German companies that Trump excoriated while in Europe recently for a summit meeting of G7 leaders.

No Big Deal

Joe Hinrichs, Ford’s president of global operations, thinks the decision is no big deal. “Consumers care a lot more about the quality and the value than they do about the sourcing location,” he says. “iPhones are produced in China and people don’t really talk about it.”

Jeff Schuster, an analyst with LMC Automotive, isn’t so sure. He believes the move is risky because “this is a big shift with a vehicle name that has been associated with the U.S. market. But if the vehicle meets the needs of the buyer, I think it’s less of an issue than it used to be.”

There is something the administration can be happy about, though. Ford says it will take the $1 billion it thinks the move to China will save the company and invest it in expanding production of big SUVs — something Americans can’t seen to get enough of. Hinrichs says his company is keenly aware of the putative president’s threats to levy huge import taxes on foreign made vehicles but thinks their strategy makes good business sense no matter what happens.

“We believe this is a much better plan for our business globally,” Hinrichs says. “We think the significant capital savings outweigh any of the risks associated with any adjustments to the border. China gets a lot of attention — we’ll see how this plays out.”

Will People Buy Chinese Focus?

Both GM and Volvo are now importing cars made in China to the US but in far fewer numbers than Ford has in mind for the Focus, which sold almost 170,000 units last year. Will Americans be comfortable buying a Chinese made car? Hinrichs says “the quality is very good in our plants there. China is capable of producing at the same global level standards we have everywhere else.” Production in China is targeted for the second half of 2019 at this moment.

LMC Automotive thinks its possible that if the Focus strategy works, the company could transfer production of other sedans in its product line up to China. Even the iconic Ford Taurus could become a candidate for Chinese manufacture, it says. Not so long ago, people laughed at the idea of owning a Chinese car. They once said the same thing about car from Korea and before that, Japan.

“Times have changed,” said David Whiston, an auto analyst with Morningstar in Chicago. “No American would consider buying a Chinese-built car 20 years ago. Now people just want their car to work.”

Source: Bloomberg

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.