Ford said today it would spend $550m to turn its Michigan assembly plant into "a lean, green and flexible manufacturing complex" to build the next-generation Focus including a new battery-electric version for North America.

The plant, which previously built large SUVs, is one of three North American light truck plants the automaker is retooling to build fuel-efficient global small cars. The first new Focus will come off the line next year and the all-electric version follows a year later.

The move will once again align the 'North American' Focus with the 'European' version sold elsewhere. The US version, with two major styling and interior updates to date, is based on the first-generation European model launched in 1997 while the European model is a second generation design - launched in 2004 - on a new platform also shared with Volvo and Mazda models. That car is built in Europe, China, South America and South Africa and the next generation will also be built in Australia.

As part of the US retooling, Ford will consolidate its operations from its Wayne Assembly Plant which builds the current North American Focus.

When production starts in 2010, approximately 3,200 employees will build the new model at Michigan Assembly Plant.

"The transformation of Michigan Assembly Plant embodies the larger transformation under way at Ford," said president and CEO Alan Mulally. "This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles. It is about leveraging our expertise and vehicle platforms around the world and partnering with the UAW to deliver best-in-class global small cars. It is about skilled and motivated teams working together in new ways to create the future of automobile manufacturing in the United States."

Ford plans to bring six "world-class" [ie European-designed] small cars to America by the end of 2012 and is converting three truck and SUV plants to car plants to make them. As well as Michigan Assembly, there is Cuautitlan Assembly in Mexico, which begins building the Fiesta early next year, and Louisville (Kentucky) Assembly, once home to the Explorer SUV, which will be converted to produce more new small vehicles on the next generation global Focus platform from 2011, the same year Australian output is expected to kick in.

Ford Europe is developing the new global C-car platform for the Focus and spin-off models. This platform will eventually be the basis for over 2m units annually worldwide, allowing the automaker to leverage economies of scale to improve investment efficiency.

The zero-emission Focus battery-electric vehicle is being developed in partnership with Magna International and features a high-voltage electric motor powered by a high capacity lithium ion battery pack charged by a 110-volt or 220-volt outlet.

Ford is also collaborating with Smith Electric to sell the European-designed and built Transit Connect battery electric commercial van in North America in 2010. Future product plans include a next-generation hybrid and plug-in hybrid modesl in 2012.

"We're changing from a company focused mainly on trucks and SUVs to a company with a balanced product lineup that includes even more high-quality, fuel-efficient small cars, hybrids and all-electric vehicles," said Ford's president of The Americas Mark Fields. "As customers move to more fuel-efficient vehicles, we'll be there with more of the products they really want."

The $550m for Michigan Assembly includes more than $430 million in manufacturing investment at the site, as well as $120 million for launch and engineering costs. In addition, Ford said, it would be making "significant investment" in supplier tooling to support the plant.

The state of Michigan, Wayne County and the city of Wayne contributed more than $160m in tax credits and grants to the project.

New equipment will include a flexible body shop with reprogrammable tooling, standardised paint shop equipment and a common-build final assembly sequence enabling production of multiple models in the same plant.

Reduced labour costs from new union work rules and global production will make the new US-made Focus "profitable from initial production", Mulally told the Wall Street Journal this week.