Trump made a big deal, and Ford let him, about him causing Ford to cancel a plant in Mexico.
However, it was part of Ford's plan all along.
Next Ford Focus will be imported from China
Newly-minted Ford CEO Jim Hackett hasn't been on the job long, but he's already signed off on a major manufacturing decision: the next Ford Focus will be imported to the United States from China.
The original plan was to import the car, due next year, as a 2019 model, from a new plant in Mexico. The current Focus is sourced from Ford's plant in Wayne, Michigan for the U.S.
Ford was going to build a $1.8 billion plant in Mexico to produce small cars, but the plant's location was ultimately changed to China. By exporting the next Focus from China, Ford is estimated to save $500 million, Joe Hinrichs, president of global operations at Ford, told Reuters.
It's not necessarily less expensive to ship a car from China than Mexico, but Ford saves millions by foregoing the Mexican plant. The Chinese plant was already scheduled to start production of the next Focus.
"This was not a variable cost decision," Hinrichs explained. "It allows us to free up a lot of capital."
Discussions to move future Focus production from Mexico to China began a couple months ago under ex-CEO Mark Fields, Hinrichs said. On the political front, the capital saved in the decision outweighs the potential cost of a border tax imposed by the Trump administration, he added.
Ford reiterated no U.S. jobs will be impacted by the decision to move Focus production to China—the Wayne assembly plant will instead gear up to build the new Ranger and Bronco. As more Americans continue to skip small cars like the Focus, the segment has become less profitable.
The next Ford Focus RS will likely still come from Germany, just like the current model, but the days of an American-made Focus will be long gone.