Ford to move medium-duty pickup line from Mexico to Ohio

March 6, 2014 – 7:34 am ET

DETROIT (Bloomberg) — Ford Motor Co., which plans to cease generating the Econoline van later this year, strategies to revive the Ohio factory in which the car is manufactured by investing $ 168 million to move pickup manufacturing there from Mexico early in 2015.

Production of Ford’s commercial F-650 and F-750 medium-duty pickups will move from a plant in Escobedo, Mexico, to Avon Lake, Ohio, the company explained in a statement these days. Ford had operated a Mexican-based mostly joint-venture with Navistar International Corp. recognized as the Blue Diamond Trucking Co. The automaker is cutting individuals ties to consider complete manage of manufacturing, design and engineering of its prime-offering F-series pickups, Joe Hinrichs, Ford’s president of the Americas, mentioned in an interview.

Ford derives most of its revenue from its F-series truck line, Morgan Stanley has said. The 2nd-biggest U.S. automaker sold 763,402 this kind of cars final year, including 8,682 medium- and heavy-duty pickups, up 18 percent from 2012. Later this yr, the firm will debut an aluminum-bodied F-150 pickup, to be followed early in 2015 with redesigned versions of the F-650 and F-750, still featuring steel bodies.

“This is a highly lucrative car,”said Kristin Dziczek, an analyst with the Center for Automotive Investigation in Ann Arbor, Mich. “The bigger the motor vehicle, the increased the revenue, so that can make it less hard that the labor fees are somewhat higher in Ohio than Mexico.”

Ford also won’t have to share income with Navistar now that it’s pulled out of that joint-venture, Dziczek mentioned.

“We’re undertaking this to bring the 650-750 manufacturing in-house so that we have complete layout, manufacturing and engineering control above our F-series lineup,” Hinrichs explained.

Business drivers

“It’s so critical to be in a position to provide our business customers every little thing from an F-150 all the way to an F-750 and to know it is built by Ford,” he added.

Moving the function from Mexico will preserve the jobs of 1,600 employees at the Avon Lake factory and honors an agreement Ford manufactured with the UAW in 2011 contract negotiations, Hinrichs explained. No new jobs will be produced and Ford’s labor charges will be unchanged by the move, he stated.

“What’s going on with Ohio is truly the utilization of the plant and the seasoned employees we have there,” Hinrichs explained.

The Escobedo plant will be a Navistar-only facility in which the organization will carry on to create its very own medium-duty and hefty-duty trucks, Steve Schrier, a spokesman, said in an e-mail. He declined to comment on no matter whether Ford’s move would lead to task losses there.

“It would be premature to speculate on the particular specifics of ending Ford production at the Escobedo plant,” Schrier stated.

Relocate manufacturing

The U.S. has surpassed Mexico as the favored spot to relocate manufacturing that had been moved offshore, in accordance to an on the web survey of 143 senior executives performed in January and February by consultant AlixPartners. It was the 1st time in the 4 many years of the study’s existence that the U.S. was selected in excess of Mexico.

Forty-2 % of manufacturing executives recognized the U.S. as their favored area, up from 37 percent a year earlier, although Mexico fell to 28 percent from 37 percent.

“America is far more aggressive these days,” Foster Finley, a managing director at AlixPartners, mentioned in a statement.

“However, the selection as to exactly where to source manufacturing need to always be a clear-headed one, taking into account lengthy-phrase considerations this kind of as type of individual products and capability of the nearby workforce.”

In Ohio, Ford is ending production of the Econoline, also acknowledged as the E-series, to make way for the Transit Van it is bringing from Europe and will generate at its Kansas City assembly plant in Claycomo, Mo.

Machinery set up

Ford has been developing autos in Avon Lake, Ohio, near Cleveland, because 1974 and that plant’s long term was a important element of contract negotiations with the UAW in 2011.

The UAW is “extremely pleased” Ford has followed by way of on its dedication to create the pickups in Ohio, Jimmy Settles, the union’s vice president in charge of its Ford department, explained in a statement.

The plant is at present operating on a single shift and will wind down production of E-series cargo and business vans by the end of 2014, Hinrichs stated. Ford has presently begun converting the plant to generate the new trucks, putting in new machinery and resources.

“A lot of tools has been going in on the fly,” Hinrichs explained. “It’s not what we would classify as a new physique shop, but the investment that’s becoming produced largely is for products in the entire body store and for tooling associated with building the 650 and 750.”

Pickup manufacturing

It is unclear how lengthy the Ohio plant will shut down in between the Econoline ending and the pickup manufacturing starting up, Hinrichs stated. It will not need as a lot downtime as the 13-week hiatus Ford is taking at its 2 U.S. F-150 plants this 12 months to convert them to generate the new aluminum-bodied models.

“There won’t be considerable downtime” in Ohio, Hinrichs mentioned. “It’s not as complex as when we go to aluminum on the F-150.”

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