Ford Motor Co. will invest $1.2 billion in three Michigan factories, paving the way for a return of the Ranger pickup and Bronco sport utility vehicle and winning praise from President Donald Trump.
About $1 billion of Ford’s spending will go toward engine and assembly plants for the Ranger and Bronco models that will replace production of slow-selling Focus compact cars, which is moving to Mexico. Another $200 million will go toward a new advanced data center at Ford’s factory in Flat Rock, Michigan, where the company already has said it will add 700 jobs.
The automaker’s announcement was previewed in an early morning tweet from Trump, who two weeks ago urged car companies to follow his pledge for eased regulations with more hiring.
“Big announcement by Ford today,” Trump posted early Tuesday. “Major investment to be made in three Michigan plants. Car companies coming back to U.S. JOBS! JOBS! JOBS!”
The investments were part of contract negotiations with the United Auto Workers union in 2015, Joe Hinrichs, Ford’s president of the Americas, said in an interview. The automaker said it plans to create or retain 130 jobs in its Romeo, Michigan, engine factory. Workers at its assembly plant in Wayne, Michigan, will start making the Ranger in 2018 and Bronco in 2020.
In the Works
“The investments in Michigan Assembly Plant and Romeo have been in the works for quite some time,” Hinrichs said by phone. “We had not discussed any of these items that we’re announcing today with the president or the White House previously until this morning.”
In a visit to the Detroit area earlier this month, Trump asked the top executives of major automakers in the U.S. to boost employment following his move to extend a review of fuel economy and emissions standards.
“You need to come back and give us big numbers in terms of jobs,” Trump told the chief executive officers of Ford, General Motors Co. and Fiat Chrysler Automobiles NV on March 15. Trump said rules imposed by the Obama administration to raise the average gas mileage of cars to more than 50 miles per gallon by the middle of the next decade “would have destroyed, or further destroyed, the auto industry.”
While Hinrichs said Ford’s investments weren’t in response to Trump’s demand, he said he appreciates the attention the president is paying to the company’s U.S. investments.
“It reinforces how important manufacturing jobs are in America and as the leading producer of vehicles in the U.S.,” Hinrichs said. “We think it’s very consistent with the pro-growth initiatives that hopefully the White House and Congress will be able to bring forward to the economy.”
Hinrichs said the announcements were timed to coincide with the state of Michigan’s grant and tax credit decisions. Ford received almost $31 million in incentives on Tuesday from the state in return for the investments in the three plants.
Ford’s conversion of Michigan Assembly into a truck factory is a reversal of its actions nearly eight years ago, when it used a portion of a $5.9 billion federal loan to begin producing small cars and hybrids at the Wayne, Michigan, site. The low-interest loan came from the U.S. Department of Energy and was aimed at promoting work on fuel-efficient cars. It came at a time when Ford was struggling to survive after posting a record $14.7 billion loss in 2008.
Ford Motor Co.
|Ford is investing $1.3 billion in Michigan plants to create more Rangers and Broncos.
“We have not paid off all the DOE loans; we’re paying them on the schedule that was originally agreed to with the government,” Hinrichs said. “We think we’ve met all of the conditions of all of those loans and we continue to have those conversations with the government.”
After Trump frequently criticized Ford during his campaign, the relationship turned around when the automaker in January canceled plans to build a $1.6 billion factory in Mexico. Trump now praises Ford and chats regularly with Executive Chairman Bill Ford about trade, regulations and taxes. The automaker was among the companies that cried foul when then-President Barack Obama ended a review of his fuel rules near the end of his administration.
Ford Chief Executive Officer Mark Fields has made several visits to the White House to meet with the president, and investment announcements by automakers have become fodder Trump cites as evidence he’s helping the U.S. economy. For the auto industry, it takes years to bring a car from drawing boards to showrooms, and factory investment decisions are typically made years before they are announced.
“While Ford may gain some advantage in future policy discussions by letting Trump announce things its board decided long ago, the UAW shouldn’t let the president take credit for investments which they in fact negotiated for their members,” said Dan Luria, an independent auto analyst who advised the union during 2015 talks.
Ford shares rose 2.1% to $11.70 at 12:44 p.m. in New York after earlier climbing as much as 3%, the biggest intraday rise in more than two months.