Ford Shifts Focus to China Plant

(Beijing) — Ford Motor Co. announced it will transfer partial production of its Focus model to China — months after the American automaker canceled plans to relocate the plant to Mexico following U.S. President Donald Trump’s vocal opposition to the move.

All Focus models are currently made at a plant in Michigan, which will be converted after the transfer to produce the Ranger midsize pickup truck as well as the Bronco, a midsize SUV.

The transfer, slated for 2019, will help Ford save $500 million, the company said in a statement Tuesday. A smaller portion of the models will be relocated to a European plant.

“No U.S. hourly employees will be out of a job tied to the new manufacturing plan for the Focus,” Ford said.

But the move has downsides, an analyst said.

“The potential to increase job opportunities in the U.S. is eliminated,” said John Zeng, general manager of Shanghai-based consultancy LMC Automotive. “And it will probably widen the large trade surplus that China enjoys against the U.S.”

In January, Trump commended Ford for reversing its Mexico plans, saying at the time: “Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S.” He has made no comment — including on his active Twitter account — after the announcement of the China transfer.

But U.S. Commerce Secretary Wilbur Ross said Tuesday that the “Ford decision shows how flexible multinational companies are in terms of geography,” according to Reuters.

Ford’s plan to move the production facility to China will weaken its profitability, as any foreign carmaker in China must form a joint venture with a Chinese firm and own no more than 50% of the company, Zeng said.

Ford founded a joint venture with Chinese peer Changan Automobile (Group) Co. Ltd. in 2001. Although China has recently stopped approving new car plants that make gasoline-powered vehicles, Ford can add the planned unit to the existing joint venture, said Chen Jun, an analyst from auto-market data provider WAYS Information Technology Co. Ltd.

Ford is not the first automaker to make such a move. Volvo Group, previously owned by Ford and acquired by China’s Zhejiang Geely Holding Group Co. Ltd. in 2010, began exporting its luxury-brand S60 Inscription, produced in China, to the U.S. in 2015. A year later, General Motors Co. began selling made-in-China Buick Envisions to the American market.

As China is the largest auto market in the world, transferring car plants there will improve local sales, analysts said. Focus models were Ford’s second-best-selling Ford model in the first five months of the year with 61,664 vehicles, trailing only the Escort.

But the brand is far from the most popular nationwide, ranking a mere 11th in May in terms of sales, according to WAYS.

“In order to improve competitiveness, Fords needs to upgrade its products, such as in-car decoration and safety devices, and prices,” said WAYS analyst Gu Huanyan.

Contact reporter Coco Feng (renkefeng@caixin.com)