Ford’s Pipe Dream: Plans to Move Production to China and Sell Cars Back to US

Ford's Pipe Dream: Plans to Move Production to China and Sell Cars Back to US

Ford Motor Co. announced Tuesday that it is moving production for the new Focus to China and has plans to start selling vehicles back to the U.S. in two years.

As sales of small cars have dropped in the U.S., car companies are attempting to reduce production costs. Ford’s president of global operations, Joe Hinrichs, said that moving production to China will save the company $1 billion, according to the Associated Press. Ford claims that the move will not cost U.S. jobs, asserting that the company employs more U.S. hourly workers and builds more vehicles in the U.S. than any other automaker.

The redesigned Focus for North America will be produced at a joint-venture factory in Chongqing. Production of the Focus will be phased out at the factory in Wayne, Mich. next year. The plant in Michigan will build new Ranger compact trucks instead.

The announcement follows strong criticisms from President Donald Trump in 2016.

“Any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG!” Trump tweeted in December, adding,

“Please be forewarned prior to making a very expensive mistake!”

Trump was particularly critical of Ford’s initial plans to build a new factory in Mexico, as the current administration has emphasized reviving American manufacturing and job creation in the U.S.

Following harsh criticisms from the president, Ford decided in January to cancel plans to build a new factory for small car manufacturing in San Luis Potosi for $1.8 billion, deciding to instead to produce the new Focus at an existing plant in Hermosillo. Ford, however, decided several months ago to send production to China, where it is already producing cars for the Chinese market. While it is cheaper to produce cars in Mexico and export them to the U.S., it made more sense to manufacture vehicles in China, as the company would only be required to retool one factory to supply North America.

“We thought this was the best balance of that cost/capital tradeoff,” Hinrichs said.

When asked whether Ford is concerned about Trump, Hinrichs explained that “the capital saving outweighs the risk.”

The new Focus will be produced in cooperation with a Chinese partner, Changan Automobile. General Motors Co. is already producing Buicks in China and exporting them to the U.S.

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