Ford To Establish Assembly Plant In Mexico

Ford has plans to establish an assembly plant in Mexico worth $1.6 billion

Ford Motor Company has revealed its plans to establish a new assembly plant in Luis Potosi, Mexico. The company is all set to make an investment of almost $1.6 billion for this assembly plant.

The automotive giant has plans to establish an assembly plant in Mexico since the operating cost in the state is relatively low. This would help them to increase the profitability factor and will result in low costs. The construction of such a plant will start in summers and the company will start to manufacture vehicles in the start of 2018. This initiative in general is going to give birth to employment opportunities for 2,800 individuals by the end of the fiscal year of 2020.

General Motors Company and Toyota Motors Corp have already made investments in Mexico so that they can come up with vehicles with low profit margins. The region is the best possible option for an automotive assembly plant since the labor cost are cheap and the export  laws are rather flexible.

The company has come up with this plan since it had to deal with a lot of criticism from Mr. Donald Trump, the Republican Presidential Candidate. Mr. Trump has passed a threat of implementing an import tariff of 35% on every vehicle manufactured in Mexico being sold in the United States.

Joe Hinrichs, the President of Ford Motors made a statement regarding the company’s investment of almost $10.2 billion in the United States. They have also given 25,000 jobs in the region in just a matter of five years. This is not it, but the company is all set to invest almost $9 billion in US by the ends of the fiscal year of 2019. This will be done in compliance to a four year contract signed with United Auto Workers.

Mr. Hinrichs stated, “The facts bear out that our investment in the US continues to be substantial. The investments in Mexico are not having an offsetting effect in the US; we’re not losing any jobs at Michigan Assembly Plant or southeast Michigan.”

The automotive giant is making investments worth $170 million in South Africa. The driving force behind the investment is that the company wishes to increase its operations in Pretoria’s Silverton Assembly Plant. At this particular power plant, the company will manufacture the all new Ford Ranger and Ford Everest which was debuted by the end of 2015. This venture will lead to the creation of 1200 job opportunities in South Africa. The company will start the production of Ford Everest in the third trimester of the fiscal year of 2016 (3QFY16). Moreover, the first units of the car will reach the markets in the fourth quarter of the fiscal year of 2016 (4QFY16). These models produced in South Africa will be retailed locally and will also be exported to the Sub Saharan automotive market.

The company is striving hard to remain on par with its global expansion plans and the recent move adds weightage to their efforts.