How Do Ford’s Plans To Make The Fusion Hybrid In Mexico Stimulate Employment In The USA?

by Jack Lifton on March 13, 2009 · 1 comment

in Batteries, Hybrids & EVs, News Analysis

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Ford manufactures all of its current hybrid models, both of them, the Ford Escape and the Mercury Mariner, in its Kansas City Assembly plant. It has now begun production of two additional models, the Ford Fusion and the Mercury Milan, at the same facility. Ford’s plan, however, is to move production of the Fusion and Milan hybrids to its Hermosillio, Mexico assembly plant. This move will turn the Fusion and Mariner hybrids into Mexican vehicles, assembled using a Japanese-designed power train, with the key component made in Japan. Why should anyone believe that this will stimulate the American economy or create jobs in the USA for American workers?

Ford has just made an agreement with the UAW that will reduce the total hourly cost of a UAW member to Ford from $72/hour to $55/hr. Even so, Ford has decided to further reduce its cost of manufacturing the new Fusion and Milan hybrids, by moving them to its assembly plant in Hermosillio in the Mexican state of Sonora.

There at Hermosillio, Ford pays hourly workers less than $10.00 (US) per hour with benefits. However, in order to maintain that cost advantage Ford must have as much Mexican and local content as possible, so it will undoubtedly produce the sheet metal, chassis components, and interior trim, and, perhaps, the glass in its Mexican operations or buy them in Mexico from suppliers who make them there.

The power train used by Ford is descended from Toyota’s original Prius power train, which Ford licensed in the early 2000s. Today, however, Ford has developed, in conjunction with Japan’s Sanyo, an advanced nickel metal hydride battery with a 20% improvement over the original battery it licensed from Toyota and Toyota’s then partner, Panasonic.

In any case the battery that Ford uses today, along with the electronic controls for it, is made in Japan. This will continue indefinitely, since no manufacturer has any plans to produce OEM automotive power train batteries of the nickel metal hydride type, or of the lithium type in Mexico.

I don’t know where Ford gets the electric motor it uses in its hybrids, but I suspect the source in Mexico will be from the Mexican production facility of an American or Japanese electric motor supplier such as GE or Hitachi.

In order to maintain its tax breaks in Mexico Ford, as would any other manufacturer, must agree to as much local content as possible. This does allow Ford to supply sheet metal, chassis, and interior parts from its own Mexican facilities some of which are part of Visteon as well as from the Mexican facilities of outside suppliers.

The problem is now obvious: A Ford Fusion or Mercury Milan made in Mexico will add or create either no manufacturing jobs to the American economy, or just a few at supplier plants that make unique components not available in Mexico.

I cannot see how this strategy can possibly deserve a penny of taxpayer dollars, in the form of either tax credits for “green cars” or of loan guarantees to Ford as economic “stimulus.”

In fact, Ford’s plan to move to a foreign country, NAFTA or not, the production of cars upon which it pins so much hope for its future and the future creation of a green America, is exactly the kind of move that got us into this mess in the first place.

Please, Mr. President and the members of the Congress, don’t let this happen.

And, if I’m wrong, please tell me what I’m overlooking.

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