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Ford to make Focus in China as Trump seeks return of manufacturing

Ford vehicles sit on the lot at a car dealership. Photo: AP

US carmaker Ford Motor has recently said that it will build its next-generation Focus compact cars in China, which will be exported to the US market for the first time starting in 2019.

The move to shift the production of the Focus vehicles to China is regarded as a major part of the global strategy adopted by the company's new Chief Executive Jim Hackett, who has pledged to improving the company's returns on the manufacturing investment.

Ford's president of global operations Joe Hinrichs estimated that the company will save $1 billion in total by manufacturing the Focus vehicles in China including $500 million saved from cancelling the previous plans to produce the cars in Mexico .

The decision to make the Focus cars in China comes amid the weakened demand for small cars in the US caused by the low gas prices, the preference for sports utility vehicles and the growing importance of China, which is the biggest car market in the world.

In the first five months of the year, car sales in the US dropped 11 percent from the same period in 2016, with the sales of the Focus cars falling as much as 20 percent, said a New York Times report.

In January, Ford announced the cancellation of its plans to establish a new factory in Mexico to produce the Focus cars. The plans were strongly criticized by Donald Trump, who slammed the American automaker for costing US jobs by making vehicles outside of the US.

Trump has long threatened to slap higher tariffs or taxes on the American automakers which build cars overseas and import them to the American market, as part of his America First policy, which places importance on American nationalism in the international relations and the protection of the interests of the domestic businesses.

At a press conference last week, White House press secretary Sean Spicer telegraphed that the president plans to cut business taxes and conduct tax reforms in a bid to encourage the American companies to bring back jobs and factories to the home base. Spicer was echoed by US Commerce Secretary Wilbur Ross who called on more US companies to locate their production facilities in the US rather than overseas as Trump's policies and reforms take hold.

In response to the Trump administration's concerns, Hinrichs defended that Ford's decision to make the Focus cars in China, where workers' wages are lower than that in Mexico, will not lead to job losses in the US. He furthered pointed out that it will help the company free up more capital that can be used for expanding American plants making more profitable trucks and sports utility vehicles and for developing projects that Ford is working on in self-driving and electrification mainly in the US. And Ford spokeswoman Kelli Felker said that adding production to its existing Chinese plants where Ford has extra capacity just requires a "relatively small investment".

What's more, consumers generally care much more about the quality and value of their cars than where they are built, according to the research findings of Ford.

Ford is among a group of American automakers which import Chinese-made cars from China. Last year, General Motors started importing Buick Envision midsize sports utility vehicles from China. The carmaker also imports some plug-in hybrid-electric Cadillac CT6 sedans from China.

Some industry insiders said that carmakers are normally seeking to produce sports utility vehicles in the US while focusing on establishing production facilities for less profitable small vehicles in the low-cost countries.

Ford has announced a $900 million investment in a Kentucky factory to ramp up the production of the revamped versions of its full-size Expedition and Lincoln Navigator, which helps preserve about 1,000 jobs in the US.

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