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Ford moves Ford Focus production to China Ford moves Ford Focus production to China
(about 1 hour later)
US carmaker Ford, which abandoned a plan to produce the new make of Ford Focus cars at a new factory in Mexico under pressure from Donald Trump, will make them in China instead. Ford is to move US production of its new Ford Focus car to China in 2019, despite having faced pressure to keep manufacturing jobs in the US from Donald Trump.
The move will save Ford $500m more than anticipated when it scrapped plans for the new Mexico plant. The carmaker said the move would not lead to layoffs in the US.
Ford said the move would not lead to job losses in the US. But the move marks another change to its plans for producing the new Focus.
The Michigan plant currently producing Ford Focus cars will switch to making trucks in 2018, it said. The firm in January scrapped plans to move US production to a new $1.6bn plant in Mexico.
Currently, Ford makes its smaller Focus cars in Michigan, Germany and in China. Currently, Ford makes its Focus cars in Michigan, Germany and in China.
The company had planned to move US production to Mexico and was building a new, $1.6bn factory near San Luis Potosi. But it has seen sales of the model fall in the US, while demand for larger vehicles remains.
Trump criticism It was planning to move US production of the Focus to a new factory near San Luis Potosi in Mexico.
But the company scrapped plans for that plant earlier this year, saying it would build the new Focus at an existing plant in Hermosillo, Mexico instead. That decision drew fierce criticism from Mr Trump, who has routinely blasted car makers and other companies for importing goods from other countries, including China and Mexico.
The decision came after US President Donald Trump criticised Ford and rival General Motors for making cars in Mexico. The Trump factor - John Mervin, BBC Business, New York
The company updated the White House about its new plans today, said Ford spokeswoman Kelli Felker. She said the firm had been considering the move for some time, with a final decision coming under Mr Hackett. A few months ago Ford's decision to abandon plans for a new plant in Mexico was seen as a triumph for President Trump and his approach to US companies and global trade.
Production of new Ford Focus cars in China is expected to start in 2019 at one of the firm's existing factories, the company said on Tuesday. Further information, such as how many added cars might be produced, was not available. His personal and public intervention seemed to have brought production of Ford's new Focus model to the United States - a clear win for Mr Trump's belief that goods bought by Americans should be made in the US.
Ms Felker said the firm does not anticipate layoffs in Hermosillo. Having the Focus made in China instead was not part of the plan. So Ford clearly runs a risk of annoying Mr Trump further. But with his legislative agenda stalled, his administration engulfed in controversies and his approval ratings sinking, it's not clear what he can do to stop it.
Ford on Tuesday also said it would invest $900m to retool an SUV plant in Kentucky. It may be the president's hands-on style of pressuring companies into bringing production to the US was only effective for a few months.
In January, Ford said it would abandon the new factory and move production to an existing plant in Hermosillo, Mexico instead. At the time, the company said it would use the savings to invest at a different plant in Michigan working on electric cars.
Tuesday's announcement means Ford will make the new Focus in China, instead of Hermosillo - producing $500m in savings.
The Michigan plant currently producing the Focus will switch to making trucks in 2018, with the same number of hourly workers, the firm said.
Ford also said it would invest $900m to retool an SUV plant in Kentucky.
The move to China will not affect employment levels in Hermosillo, which produces other models, said spokeswoman Kelli Felker. It also does not affect the plans for the additional investment in Michigan, she said.
Ford updated the White House about its new plans on Tuesday, Ms Felker said. She said the firm had been considering the move for some time.
White House spokesman Sean Spicer on Tuesday said Ford's plans - which could have a large impact on US parts suppliers - underscored the need for tax reform, to help make domestic manufacturing more competitive.
New leadership
The investments are some of the first announced under new leadership at Ford.The investments are some of the first announced under new leadership at Ford.
The company named Jim Hackett as the new chief executive in May after pressure from shareholders. The company named Jim Hackett as the new chief executive in May after pressure from shareholders to improve the firm's performance.
Demand for smaller cars, such as the Ford Focus, is stronger outside of the US. Joe Hinrichs, an executive vice president at Ford, said the savings from the move to China would allow the firm to invest in parts of the business that are growing, such as SUVs, electric cars and other areas.
Joe Hinrichs, an executive vice president at Ford, said the savings from the move to China would allow the firm to invest in parts of the business that are growing, such as SUVs, electric cars and others.
"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," he said."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," he said.
Ford sold about 67,150 Focus cars in the US in the first five months of 2017, down almost 20% from 2016.
Production of new Ford Focus cars in China is expected to start in 2019 at one of the firm's existing factories in Chongqing, the company said on Tuesday. Further information, such as how many added cars might be produced, was not available.