Ford backs out on its Mexican investments

By Elliot Bullman

Ford has said it will cancel a $1.6bn plant it planned to build in Mexico and instead extend operations at its factory in Michigan.

The US car giantwill spend $700m on expanding the plant at Flat Rock.

ford car

Ford boss Mark Fields said the decision was partly due to falling sales of small cars and partly a "vote of confidence" in Donald Trump's policies.

The President-elect has criticised both Ford and its rival General Motors over production of models in Mexico.

Mr Trump earlier on Tuesday tweeted criticism of GM's production of its Chevy Cruze model in Mexico.

'Vote of confidence in Trump'

Ford's chief executive, Mark Fields, said that the main decision to cancel the plant in Mexico was because of a "dramatic decline for the demand for small cars here in North America," allowing the company to cope with its existing plant.

But he said another factor in the decision was the "more favourable US business environment that we see under President-elect Trump and some of the pro-growth policies that he's been talking about".

Electric cars

Ford is not abandoning production completely in Mexico, but is switching production of its Focus model to its existing plant in Hermosillo to improve profitability.

car 1665825

The planned $1.6bn plant in Mexico was to be built in San Luis Potosi, but Ford said it would now invest some of that sum in Flat Rock, creating 700 jobs building a range of electric cars.

Mexico's economy ministry said it regretted Ford's decision, adding that it had assurances that the US car firm would pay the state of San Luis Potosi for any costs incurred from the cancellation.

Mr Trump has criticised other US industry titans since his election win and has vowed to make good on campaign promises to bring jobs back to America by, as he puts it, levelling the playing field.

However, some commentators have expressed concern that restricting imports could damage the US economy.

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