(This story has been updated reflecting comments by Ford.)
In a surprise announcement, Ford said it will move two key models from a suburban Detroit assembly plant to another factory when they’re redesigned in 2018. There has been widespread news reportage indicating the Ford Focus and C-Max models will be shifted to Mexico, but the maker has said a final production site has not yet been determined.
The news come shortly after Ford announced it would drop a third shift at the Michigan Assembly Plant due to weak sales of the products built there, including the Ford Focus and the C-Max.
The announcement also precedes by barely two weeks the start-up of quadrennial contract talks between the second-largest Detroit automaker and the United Auto Workers Union. That has at least one well-placed labor source wondering whether the decision, more than three years ahead of the actual move, might be a bargaining ploy.
A Ford representative confirmed reports that the Focus and C-Max models will be moved from the Michigan Assembly plant, but stressed that as for where they will go next, “We currently are reviewing several possible options. We will share details once our studies are complete.”
That said, few observers would be surprised if the Focus and C-Max do wind up moving to a Mexican plant. Detroit makers have long struggled with manufacturing costs for their smaller product lines. That’s why Ford’s smallest model sold in the U.S., the Fiesta, already is produced in Mexico.
In fact, Mexican automotive production has been growing at a record pace in recent years, in part due to cheap labor but also because it has numerous free trade agreements which make it easier to export vehicles to markets all over the world.
Honda, for example, uses its own Mexican plant to produce its Fit hatchback and HR-V crossover models.
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Working with the United Auto Workers Union, Detroit’s makers have tried to bring back small car production. General Motors, for example, struck a special deal with the UAW that helped reduce manufacturing costs at a factory in the Detroit suburb of Orion Township. In turn, it transferred production of the Chevrolet Sonic there from a plant in Korea.
But small car sales have, on the whole, been tumbling, so that plant is also cutting back production, at least until GM launches its new Chevy Bolt battery-electric vehicle there more than a year from now.
Ford has seen sales of the compact Focus model plunge 3.2% this year, while demand for the C-Max “people mover” plunged 16.9% during the first half. Barring a surge in gas prices, few expect any immediate upturn. Sales of battery-based versions of those two models, such as the Focus Electric and C-Max Energi, have been particularly hard hit by declining fuel costs.
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What Ford has in store for the next-generation models has not been announced beyond the news of a manufacturing plant shift.
Ford representatives say the factory, which currently employs 4,000 UAW members, won’t close, but what might go into the Michigan Assembly Plant to replace the Focus and C-Max also isn’t being discussed.
A statement from Ford did note, however that it “will discuss this issue with UAW leadership as part of the upcoming negotiations.”
Over the decades, Detroit’s Big Three have often made announcements about plant closings, cutbacks and production shifts in the weeks and months leading up to contract talks in order to influence negotiations. Skeptics are questioning whether the new announcement is a fallback to past practices.
But Ford and the union have made significant efforts in recent years to change the traditionally confrontational labor-management approach, a shift that could be threatened by today’s announcement.
If anything, UAW Vice President Jimmy Settles, who oversees union operations at Ford, appeared to try to quell such concerns.
“We are extremely confident that a new product commitment will be secured during the upcoming 2015 negotiations and that the Michigan Assembly Plant will maintain a full production schedule,” he wrote on the UAW’s Twitter account.
Whether that might require additional cost-cutting efforts will likely be determined during the upcoming contract talks.
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