Ford Moving Production of Small Cars to Mexico

[Manuel]

http://www.usatoday.com/story/money/cars/2016/09/14/ford-moving-all-production-small-cars-mexico/90354334/

Anyone else a bit disappointed by this? I haven't had any significant issues with build quality in '14 FiST, and I'm happy to see more opportunities for Mexican workers, but it's hard to sympathize with the principle behind moving production to Mexico beyond the motivation of cost savings. Not to mention I can't imagine those savings are being passed on to the consumer (or the employees)...

With companies like Subaru pushing the envelope in terms of "eco-friendly" manufacturing and bringing those jobs back to the U.S. (the new Impreza will be built in Indiana, I believe) I can't help but wish Ford, one of the largest American auto manufacturers, would follow suit. Hell, even Volkswagen makes the GTi in Mexico now!

 

[BRGT350]

I have been driving Mexican built Ford's for the last 16 years and have thought they were some of the best cars I have owned. Our US built Escapes have had more issues than any of my cars made in Mexico. Plus, building in Mexico makes more sense. Mexico has trade deals with South American countries that the US doesn't so Ford can export cars out of Mexico without the huge tariffs that get applied to US made cars. Logistically, it makes more sense to build cars more centrally located between your markets. Remember that Ford is a global company making products for markets all over the globe in plants all over the globe. They are not a regional entity for the US. They just happened to have HQ in the US.

 

[Manuel]

I have been driving Mexican built Ford's for the last 16 years and have thought they were some of the best cars I have owned. Our US built Escapes have had more issues than any of my cars made in Mexico. Plus, building in Mexico makes more sense. Mexico has trade deals with South American countries that the US doesn't so Ford can export cars out of Mexico without the huge tariffs that get applied to US made cars. Logistically, it makes more sense to build cars more centrally located between your markets. Remember that Ford is a global company making products for markets all over the globe in plants all over the globe. They are not a regional entity for the US. They just happened to have HQ in the US.

Those are some great insights - thank you! It's easy to forget Ford is indeed a global company, even though they may be "based" in the U.S. When I went to Mexico on vacation this summer, there were more Fiestas on the road than I could count!

It's a shame that the U.S.'s trade policies aren't as appealing as Mexico's, but understandable from a business perspective. The article even makes mention that they did it as a move to "appeal to shareholders", I believe.

The proud 'Murican in me just wishes for more job opportunities for blue-collar workers here in the States.

 

[Joker328]

With companies like Subaru pushing the envelope in terms of "eco-friendly" manufacturing and bringing those jobs back to the U.S. (the new Impreza will be built in Indiana, I believe) I can't help but wish Ford, one of the largest American auto manufacturers, would follow suit. Hell, even Volkswagen makes the GTi in Mexico now!

Just wanted to add that Subaru is a very different brand than Ford. Subaru has some of the best pricing power in the industry. They have fewer incentives than pretty much any other brand because people are willing to pay sticker or close to it for a Subaru. Ford, despite having higher volumes, is not anywhere in that league with respect to pricing power on their small cars. They do alright on trucks and SUVs, but the margins on small/midsize cars are really slim with gas as cheap as it is right now and everyone wanting Crossovers, SUVs, and trucks.

And it's not a matter of whether they will "pass it on to the customers" so much as they would have to increase prices beyond a point that would be competitive if they were to stay with a US (and US union in particular) workforce for these cars. Believe me, Ford knows how bad this makes them look and that a significant part of their consumer base will not be happy about it, but realistically they held out as long as they could. As you mentioned, many other manufacturers have already done the same. On the plus side, it seems like the plants that currently make the cars in the US will be converted to truck or SUV production, so hopefully there are not substantial layoffs as a result.

 

[BRGT350]

Those are some great insights - thank you! It's easy to forget Ford is indeed a global company, even though they may be "based" in the U.S. When I went to Mexico on vacation this summer, there were more Fiestas on the road than I could count!

It's a shame that the U.S.'s trade policies aren't as appealing as Mexico's, but understandable from a business perspective. The article even makes mention that they did it as a move to "appeal to shareholders", I believe.

The proud 'Murican in me just wishes for more job opportunities for blue-collar workers here in the States.

No problem. Part of my job is trying to supply products to South America, and it is very difficult with the trade restrictions to be competitive. It sucks for any US company trying to cover the western hemisphere with products. Ford's are pretty popular in Brazil and I saw all sorts of Fiesta's down there, of all vintages. Mexico is where I saw my first Focus RS MkIII outside of the shows, and there are a lot of MkII ST's down there too. Ford is a hugely popular brand in the world. Building in Mexico makes total sense for small cars, which tend to also be popular in markets that aren't as truck/SUV focused. During the original Fiesta Movement, we learned that the plant in Mexico was picked for supplying NA and SA markets. Put the plant in the center and with good trade relations makes sense. I would guess to get the MkIII Focus and C-Max into SA, Ford would either need to pay high tariffs from the US or import from Europe with high transportation costs. Mexico makes way more sense. One Ford plan means they are taking more of a global product strategy instead of regional, which has been great for the US since we got the Fiesta, Focus MkIII, ST, RS, C-Max, Escape, and Transit. No more are those products kept out of the US. When you step back and look at the big picture, you wonder what took so long to move production.

Even if there are consumers upset, chances are they are a very small percentage, most likely wouldn't be buying a small car anyway, they will have a short memory of this event (goodness, people keep buying Toyotas after they run off into walls, Hondas with exploding shrapnel airbags, GM with tax money, and the list goes on and on and on), and the small percentage of people who are upset are out weighed by the massive numbers of new buyers in countries that benefit from the move. Think globally. In the long run, this is actually better for the US workers. Most suppliers are US based, so they see an increase in orders due to increased sales in new markets and workers making the cars in Mexico will have more money to spend on US products. Current workers in the US from the factories will be making trucks, so they will keep working away.

 

[M-Sport fan]

^^Yes, and the other point that everyone forgets about in their unwavering, diety-like praise for the foreign based manufacturers with 'transplants' here is that they do NOT have to deal with all of the overbearing legacy costs (BIG pensions, high pay, etc.) which the long term domestic based manufacturers must, yes, in part due to the unions.

Because of this, and the ridiculous tax/tariff/etc. breaks/giveaways (and maybe even PAYOUTS to) these foreign based/nameplated companies recieve, along with NOT having to deal with any unions, or their legacy costs, or even shipping costs, the foreign transplant companies can FAR undercut the domestic nameplate companies on their products which are built here.
It is a WIN WIN WIN for them (BIG profits, public relations, tax/tariff giveaways, and 'feelgood' guilt easing for their consumers) with NO negatives for them all, unless their home market workers complain about the loss of jobs the transplants equate to for them.

They are NOT doing this out of their "love and benevolence" for or of the U.S. citizens/residents, like so many seem to claim/think they are!

 

[Manuel]

No problem. Part of my job is trying to supply products to South America, and it is very difficult with the trade restrictions to be competitive. It sucks for any US company trying to cover the western hemisphere with products. Ford's are pretty popular in Brazil and I saw all sorts of Fiesta's down there, of all vintages. Mexico is where I saw my first Focus RS MkIII outside of the shows, and there are a lot of MkII ST's down there too. Ford is a hugely popular brand in the world. Building in Mexico makes total sense for small cars, which tend to also be popular in markets that aren't as truck/SUV focused. During the original Fiesta Movement, we learned that the plant in Mexico was picked for supplying NA and SA markets. Put the plant in the center and with good trade relations makes sense. I would guess to get the MkIII Focus and C-Max into SA, Ford would either need to pay high tariffs from the US or import from Europe with high transportation costs. Mexico makes way more sense.

Very interesting! I often forget how "isolated" my line of work is (sitting behind a desk and coding away for 8 hours a day); it's easy to lose perspective.

One Ford plan means they are taking more of a global product strategy instead of regional, which has been great for the US since we got the Fiesta, Focus MkIII, ST, RS, C-Max, Escape, and Transit. No more are those products kept out of the US. When you step back and look at the big picture, you wonder what took so long to move production.

This x 1,000,000. I am so excited to see more manufacturers move to a global strategy, as it means we finally get the opportunity to buy some of the more niche cars previously exclusive to European market (the RS is a perfect example of this). I do wonder how a "global platform" strategy will affect their ability to appeal to the hugely varied tastes of each culture. I.e. China may be interested in quiet, comfortable cars while Europe and the U.S. are looking for something more sporty and willing to sacrifice some of the refinement.

In the long run, this is actually better for the US workers. Most suppliers are US based, so they see an increase in orders due to increased sales in new markets and workers making the cars in Mexico will have more money to spend on US products. Current workers in the US from the factories will be making trucks, so they will keep working away.

Also something I didn't consider. A decrease in overhead costs for manufacturing would mean they can potentially price their products more competitively, meaning more consumer demand. The end result is more demand for U.S.-made products and parts. Win-win IMO!

 

[BRGT350]

actually, market research suggests that car buyers are more aligned than previously thought. Automakers do make small tweaks for the cars based on the regions. What interests a small hatchback buyer in the US isn't far from the one in Japan or the one in Brazil or Spain. It is usually things like color, options (Europeans will pay more for more features in a small car than a consumer in the US), or ride tuning. Global platforms are a huge win. The Focus platform makes something like 11 different products. You only need to design the tooling once, rather than every country designs their own tooling for each Focus or other car. One of the biggest hurdles has been the government regulations in different countries. European headlamps are a no-go in the US are just one example. Even things like side mirrors and the % of the windshield that the wipers cover is a regulation. Did you know that the Fiesta almost never happened in the US because they couldn't meet the wiper requirement due to the tall windshield?

Anyway, moving production is the right thing to do for a global operation, even if it means some political backlash in the election year. If this was 2017, nobody would even be talking about it.

 

[M-Sport fan]

Yeah, I just wish that we were "aligned" with Europe/England on the whole 3 door thing, vs. ONLY a 5 door (crash tests and all).

 

[Strife]

In terms of pride; yes I'd love for Ford to continue manufacturing small cars in the United States. With pride set aside; what I mostly care about is build quality. I wish there could be a compromise between all of this some how, or that the savings could be passed on to the consumer. But that would be in a perfect world.

 

[OffTheWall503]

I really don't have a problem with this. Haven't many Fords been assembled in Mexico for awhile now? Many Mazdas, too.

I work for Toyota and have noticed that their US-made vehicles aren't 100% perfect, either. Many of the recalls in the past few years has been due to assembly line errors or the need to hit production quota numbers, with manufacturers taking care of little issues later because it's cheaper than stopping assembly of a vehicle.

Products made/built in the USA don't guarantee they are going to be better quality.

 

[M-Sport fan]

I really don't have a problem with this. Haven't many Fords been assembled in Mexico for awhile now? Many Mazdas, too.

I work for Toyota and have noticed that their US-made vehicles aren't 100% perfect, either. Many of the recalls in the past few years has been due to assembly line errors or the need to hit production quota numbers, with manufacturers taking care of little issues later because it's cheaper than stopping assembly of a vehicle.

Products made/built in the USA don't guarantee they are going to be better quality.

Not at all, but, it DOES ensure that whatever actual U.S. citizens' bodies are needed for labor/robotics control in assembly plants (AFTER even more automation yet, takes even more jobs away ) does NOT decline.

I too used to work for the Nippon Giant, and it was THE WORST experience of my whole 61 years on this globe.
Needless to say, I would rather crawl through broken glass covered in acid to get where I am going than to drive one of their products (yes, EVEN including their 'saint-like' to the import fanboyzz, MKIV TT and other performance cars, let alone their mundane, point A to point B 'appliances'!), and that was BEFORE I had the 'pleasure' of working for the tyrants!

 

[Joes2016ST]

It's all gonna change when Trump gets the White House.

 

[Noodles]

It's all gonna change when Trump gets the White House.

Really, you have to make this political on a car Forum?

Sent from the Canyon's Edge

 

[M-Sport fan]

Really, you have to make this political on a car Forum?

Sent from the Canyon's Edge

+1

One of the reasons I like this site is that it (and most of it's members) seems to avoid the whole highly volatile, ascerbic, extremely vitriolic, politics of a lot of other sites that I have totally given up on, just for that reason, and the 'ganging up' that it's majority, PURIST, 'certain extremist political worldview' members engage in towards those who disagree with them in the least.

It's a shame too, because IF one took away those politics COMPLETELY, it would be an EXCELLENT site indeed!

I personally do NOT want that to happen on here, and I even have to catch myself at times to keep from interjecting any actual politics (except for trade issues, and I will attempt to either tone those down, or eliminate them completely in the future!) into posts.