Detroit ‘big two’ automakers Ford and General Motors have both announced substantial investments in factories in Kansas City, Missouri and Mexico.
Ford will spend US$400m on its Kansas plant to build a “new vehicle”, widely expected to be a new small SUV, to replace the Escape currently assembled there while GM has earmarked $540m for an existing Mexican engine plant to build new, more fuel efficient I4 units.
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The new Ford will replace the current Escape on the Kansas line after the next generation of that model – shown as the Vertrek concept at the Detroit show earlier this month – moves to the Louisville, Kentucky, assembly plant and retooling at the Missouri facility is completed. Ford earlier moved production of the 2011 Explorer from Louisville to Chicago, freeing the revamped Kentucky plant to in turn be retooled for the Escape.
The small SUV is expected widely to be based on, and share its platform and some parts with, Ford Europe’s next generation Kuga under the automaker’s One Ford model global model programme.
The state of Missouri approved tax incentives that played a role in Ford’s decision on Kansas, the automaker said.
The $400m will be used to install a new body shop, new tooling and other upgrades. In addition, the company has committed to retain the current 3,750 full-time jobs at the plant including assembly roles on the separate F-150 pickup truck line.
“This investment and promise of a new vehicle to be built in Kansas City reinforces Ford’s commitment to US manufacturing and American jobs,” said Ford Americas president Mark Fields. “Investing in our plants, products and people is critical to Ford’s ability to compete with the best in the business. [We are] committed to doing everything it takes to work with… partners, including the United Auto Workers, to remain competitive.”
Kansas City is the fourth North American facility Ford is retooling for production of new vehicles that are at the heart of a new line of cars, trucks and utilities. The new vehicle planned for the plant will be announced later.
To secure its future manufacturing presence in the state, Ford worked closely with Missouri governor Jay Nixon and the Missouri state legislature to pass the 2010 Missouri Manufacturing Jobs Act which provides tax incentives for certified automotive manufacturers that commit to new investments and job retention and suppliers who create new jobs in the state.
Kansas City Assembly Plant opened in 1951 and currently builds the F-150 on one shift and the Escape on three.
Edmunds.com senior analyst Karl Brauer said: “Ford’s tremendous success over the last three years has been the result of intense product development more than anything else. With this investment it’s clear the company isn’t planning on letting up any time soon.”
Meanwhile, General Motors said it was spending $540m on its engine plant in central Mexico to build more fuel-efficient engines for the recovering North American market.
The move by GM, flush with cash after its 2009 restructuring in bankruptcy, follows other investments in recent years by American, European and Asian automakers seeking to produce more fuel-efficient models in Mexico, Reuters noted.
Mexican President Felipe Calderon welcomed the GM news, announced on Thursday (20 January), as a vote of confidence in Mexico, where rising drug violence has worried some foreign companies.
“This action shows confidence in Mexico and the conviction of one of the most important companies in the world that Mexico is a safe and productive place to invest,” Calderon said at an event in the central industrial hub of Toluca, where GM operates one of its five facilities in the country.
A 50% surge in Mexican vehicle production – much of it shipped to the US and Canada – last year helped speed the recovery of Latin America’s second-biggest economy out of a deep recession, the news agency said.
The new engine production line is being built at a plant where GM stopped production of fuel-guzzling trucks during the recession, Calderon said.
Automobiles and auto parts account for around one-fifth of Mexico’s total manufactured exports and the country’s recovery depends on solid demand from the United States, which buys around 80% of Mexico’s exports, the report added.
GM will build 1.6-litre and 1.8-litre I4 engines at the Toluca plant. Chrysler has a plant in the area which made the PT Cruiser for years and now builds the Fiat 500 for North America.
Toluca has seen only 29 drug-related murders since late 2006, compared to more than 6,400 in the similarly sized border city of Ciudad Juarez, according to a federal government database cited by Reuters.
