Ford announced this week that it will build its Focus small car in China and import it to the US market.
Ford’s small-vehicle production was a source of consternation for the company during the 2016 presidential campaign, when Donald Trump attacked Ford for plans to move small-car manufacturing to Mexico.
For axed plans for a Mexico factory, but the carmaker doesn’t want to use its capacity in the US to assemble a relatively unpopular small vehicle for American buyers, who have been favouring crossovers and SUVs amid a record sales boom.
The China move will enable Ford to repurpose some capacity to build a new Ranger mid-size pickup and a new Bronco SUV. Both vehicles are cornerstones of Ford’s traditional core business moving forward.
To hold the line on its workforce and prevent Trump from losing it on Twitter, Ford will “also invest $US900 million at its truck factory in Kentucky to build Expedition and Lincoln Navigator sport utility vehicles, preserving 1,000 jobs,” Bloomberg’s Keith Naughton reported.
Make no mistake, Ford is taking a political risk here, and it’s unclear if either the company’s new CEO Jim Hackett or Chairman Bill Ford has lined up sufficient cover with the Trump administration.
Trump needs US carmakers such as Ford to hire in the Midwestern battleground states where he won in 2016 — and needs to maintain an edge in the region if the Republicans hope to hold the Congress in the midterm elections next year and get Trump another term in 2020.
However, Detroit has maxed out its capacity amid the boom and doesn’t want to add addition factories or shifts as a downturn looms. That’s why Ford has been shuffling things around and looking to lower-labour-cost markets like China to sustain marginally profitable at best small car manufacturing.
This column does not necessarily reflect the opinion of Business Insider.
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