Ford confirmed Friday it plans to invest $2.5 billion to build new engines and transmissions in Mexico and will eventually hire an additional 3,800 workers in a move that underscores a movement of automotive investment south from Canada and and the U.S.
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Ford said it will invest:
- $1.1 billion to build a new engine plant within its plant in Chihuahua, Mexico to build new gasoline engines. Those engines will be exported to the U.S., Canada, South America and the Asia-Pacific region for use in Ford’s small car. That plant will employ about 1,300 workers.
- $200 million to expand its four-cylinder and diesel engine capacity at the Chihuahua plant and add 500 jobs.
- $1.3 billion to build a new transmission plant within its plant in Guanajuato, Mexico to build new transmissions and add 2,000 jobs there. Ford said will continue to make six-speed transmissions through its joint venture with Getrag at the Guanajuato plant. However, Ford will operate the new transmission plant on its own.
“These new engines and transmissions will help deliver even better driving experiences and fuel economy gains for customers around the world,” Joe Hinrichs, Ford’s President of the Americas said in a statement from Mexico.
The Free Press reported earlier this week that Ford plans to build a 1.5-liter turbocharged four-cylinder EcoBoost gasoline engine in Mexico. Ford declined to confirm any details about the types of engines or transmissions it plans to build.
Ford builds the Fiesta subcompact car in Cuautitlán, and its plant in Hermosillo assembles the the Fusion and Lincoln MKZ mid-size cars.
The Dearborn automaker’s move comes just two days after Toyota said it would end production of the Corolla in Canada and spend $1 billion to build a new plant in Mexico for its popular compact car.
A few years ago, Canadian and Ontario officials tried to convince Ford to build its engine plant in Windsor, where it currently operates two engine plants.
Both announcements alarmed those involved in the automotive industry in Canada and Ontario. The investment surge in Mexico illustrates how swiftly capital investment can shift directions, taking thousands of jobs along with it.
“It would be nice to have Ford say something about their engine plants in Windsor,” said Tony Faria, codirector of the office for automotive and vehicle research at the University of Windsor. “It feels like a kick in the teeth every time they announce an engine announcement somewhere else.”
The investments in Mexico are less alarming for the U.S. automotive industry because the Detroit Three have been investing heavily in plants across the Midwest in recent years as they have rebounded from the Great Recession.
Taken together, the Ford and Toyota investments will create 5,800 jobs over the next five years.
Over the past twenty years, as Mexico’s automotive industry has matured, automakers have begun to favor the country’s lower labor costs, the high quality cars they have been able to produce there, its free trade agreements and the robust transportation that makes it easy to export cars and trucks.
In addition to NAFTA, Mexico has 10 other free trade agreements covering 43 countries, according to ProMexico, an economic development arm of the Mexican government.
Earlier this week Toyota said it plans to spend $1 billion to build a new plant in Guanajuato in central Mexico where it will make its next-generation Corolla.
Japan’s No. 1 automaker also said it will end production of the Corolla at its plant in Cambridge, Ontario, and will replace the Corolla with another passenger car as it makes its first major investment since 1997.
The new plant in Mexico will employ about 2,000 workers and will have an annual production capacity of about 200,000 cars. It also is the automaker’s first new plant in three years. Production of the new Corolla is expected to begin in 2019. Toyota also will continue to produce the Corolla at its plant in Blue Springs, Miss.