Ford: Goodbye U.S., Hola México

From The Oakland Press this morning:

Leak: Ford craves Mexico
Disgruntled employee reveals plans for multibillion dollar Mexico investment
By JOSEPH SZCZESNY Press Automotive Editor


Ford Motor Co. is preparing to make a major multibillion dollar investment in Mexico as part of the company’s sweeping Way Forward restructuring that started last year.
The investment is included in a confidential, 28-page document turned over to The Oakland Press by a disgruntled Ford employee. The fax included a note saying: “Governors and others who want to get work in their states are courting us. We have no intention or plans of give (sic) them work.â€
“The Way Forward — Mexico (offers an) opportunity to further leverage Ford of Mexico cost advantage and location to reduce corporate fi xed costs,†the confi dential document said. “Mexico is ready — fast and reliable solution and an established organization with proven capabilities to build from. “We will leverage our global scale like never before and Mexico is a key partner as we’re targeting lower fi xed costs, better quality and speed to deliver our Way Forward plans,†the documents said.
A second source familiar with Ford operations vouched for the authenticity of the documents, which suggest the automaker’s new investment could potentially create as many as 150,000 new jobs in Mexico within the next decade.
Ford spokesman Said Deep said Tuesday he could not confirm or deny the substance of the documents. “I haven’t seen them,†he said.
As part of the Way Forward restructuring initiative, Ford announced plans to close six plants by the end of 2008. In addition, Ford also announced that nine more plants in the United States and Canada could close by 2012 and the effort to pare the company’s capacity will lead to the elimination of between 25,000 and 30,000 jobs by 2012.
Mark Fields, the executive vice president in charge of the North American restructuring effort at Ford, also said in January the company was prepared to build a new assembly plant in North America.
The building blocks for the Way Forward plan include expanding Ford’s manufacturing footprint in Mexico by revamping an old assembly plant in Cuautitlan, near Mexico City, which last year some analysts suggested Ford might be prepared to close.
In addition, Ford also would construct a new greenfi eld plant and substantially increase the company’s production of engines and transmissions in Mexico, where it now operates a powertrain plant.
Ford has been criticized for not providing more details of its turnaround plan and the pressure has increased after the company disclosed it lost $1.2 billion in the fi rst quarter. Meanwhile, the company’s stock has languished, and rating services are threatening to cut Ford’s credit rating again.
The Way Forward document, part of which was prepared for a presentation in early April to offi cials from the Mexican government, also states Ford’s investment in Mexico could total $9.2 billion over a six-year period stretching from 2006 to 2012.
Other parts of the document, which was apparently prepared for senior Ford executives such as Anne Stevens, Ford’s chief deputy, are stamped with the notation “For Ford Only.â€
The investment for this initiative would represent between 7 percent and 9 percent of the total foreign direct investment in Mexico. The projected employment driven by the investment would reduce unemployment in Mexico by as much as 15 percent. It would also generate exports valued at $18 billion.
The documents also indicated that Ford expects to increase its purchases of Mexican-made components by 300 percent, while suppliers could increase their investment by $3.6 billion.
Ford, which is hoping to attract incentives from the Mexican government, also said it was prepared to shift some professional engineering and purchasing jobs to Ford of Mexico as part of the expansion plan.
The confi dential documents also noted the political sensitivities involved in the announcement of any expansion. Any announcement would have to come after the United Auto Workers convention, which is being held this week in Las Vegas.
Ford officials, according to one timeline included in the package, also were considering making the announcement before Mexican voters pick a new president on July 2, because it might help boost Feipe Calderon, who is backed by Vincente Fox, Mexico’s outgoing president.
Calderon is locked in a very tight race with Manuel Lopez Obrador, the mayor of Mexico City. The documents suggest postponing any announcement would reduce risk of confrontation with the new government should Calderon lose in July.
The documents also note that other automakers are betting heavily on Mexico. DaimlerChrysler is preparing to invest up to $1 billion in its operations around Toluca and General Motors is sinking $820 million in San Luis Potos.
Nissan also is investing $1.3 billion in Aguascalientes, Mexico and Toyota also has recently expanded its operations in Mexico.

 

<div class='quotetop'>QUOTE(Marlin @ Jun 14 2006, 09:21 AM) [snapback]271046[/snapback]</div>

With the UAW convention going on in Las Vegas right now, the fireworks that this revelation will surely create should be pretty noisy.

 

<div class='quotetop'>QUOTE(MarinJohn @ Jun 16 2006, 02:00 PM) [snapback]272311[/snapback]</div>

Few people who frequent PriusChat are very close to the American auto industry and don't really care if it goes down the tubes or not, believing themselves too far removed from it to be affected. A lot of us have had very bad experiences with American cars and/or the dealeships that we bought them from so there is little love lost. I was born and raised in the so-called Motor City so it's closer to home (literally) for me than most, which is why I usually see the news before most everyone else. I get to see firsthand all of the For Sale signs all over the Detroit area that are the result of the devastation wrought by the failure of GM, Ford and Chrysler, not to mention all of the people who are suffering. Regardless the American automakers' self-inflicted problems, the people with the For Sale signs in front of their houses are still people who could probably use a little compassion; even if they had little of it themselves for their customers. The Oakland Press (hometown newspaper) actually scooped the big Detroit papers on this one by a day and few PCers, if any, would have been reading it so I really got the advanced notice on this one.