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

March 6, 2014 – 7:34 am ET

DETROIT (Bloomberg) — Ford Motor Co., which ideas to cease producing the Econoline van later this year, programs to revive the Ohio factory where the automobile is made by investing $ 168 million to move pickup production there from Mexico early in 2015.

Production of Ford’s business F-650 and F-750 medium-duty pickups will move from a plant in Escobedo, Mexico, to Avon Lake, Ohio, the company said in a statement today. Ford had operated a Mexican-primarily based joint-venture with Navistar Worldwide Corp. acknowledged as the Blue Diamond Trucking Co. The automaker is cutting individuals ties to get full manage of production, design and style and engineering of its best-promoting F-series pickups, Joe Hinrichs, Ford’s president of the Americas, stated in an interview.

Ford derives most of its profit from its F-series truck line, Morgan Stanley has said. The second-greatest U.S. automaker offered 763,402 such autos last yr, which includes 8,682 medium- and heavy-duty pickups, up 18 percent from 2012. Later on this year, the company 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 very lucrative car,”said Kristin Dziczek, an analyst with the Center for Automotive Study in Ann Arbor, Mich. “The greater the vehicle, the increased the profit, so that tends to make it much less difficult that the labor costs are somewhat increased in Ohio than Mexico.”

Ford also will not have to share income with Navistar now that it’s pulled out of that joint-venture, Dziczek explained.

“We’re undertaking this to carry the 650-750 manufacturing in-property so that we have complete layout, manufacturing and engineering management above our F-series lineup,” Hinrichs mentioned.

Business drivers

“It’s so essential to be ready to provide our industrial clients every thing from an F-150 all the way to an F-750 and to know it is built by Ford,” he added.

Moving the operate from Mexico will protect the jobs of one,600 employees at the Avon Lake factory and honors an agreement Ford created with the UAW in 2011 contract negotiations, Hinrichs mentioned. No new jobs will be created and Ford’s labor expenses will be unchanged by the move, he explained.

“What’s going on with Ohio is actually the utilization of the plant and the experienced workers we have there,” Hinrichs mentioned.

The Escobedo plant will be a Navistar-only facility the place the organization will proceed to develop its very own medium-duty and heavy-duty trucks, Steve Schrier, a spokesman, mentioned in an e-mail. He declined to comment on whether Ford’s move would lead to task losses there.

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

Relocate manufacturing

The U.S. has surpassed Mexico as the favored place to relocate manufacturing that had been moved offshore, in accordance to an online survey of 143 senior executives carried out in January and February by advisor AlixPartners. It was the 1st time in the 4 many years of the study’s existence that the U.S. was selected over Mexico.

Forty-2 percent of manufacturing executives identified the U.S. as their favored place, up from 37 % a 12 months earlier, although Mexico fell to 28 % from 37 %.

“America is much more competitive right now,” Foster Finley, a managing director at AlixPartners, stated in a statement.

“However, the selection as to in which to supply manufacturing ought to often be a clear-headed a single, taking into account long-phrase considerations this kind of as variety of person goods and capability of the regional 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 create at its Kansas City assembly plant in Claycomo, Mo.

Machinery installation

Ford has been creating autos in Avon Lake, Ohio, close to Cleveland, considering that 1974 and that plant’s potential was a essential element of contract negotiations with the UAW in 2011.

The UAW is “extremely pleased” Ford has followed via on its dedication to construct the pickups in Ohio, Jimmy Settles, the union’s vice president in charge of its Ford division, stated in a statement.

The plant is currently working on one particular shift and will wind down manufacturing of E-series cargo and business vans by the end of 2014, Hinrichs explained. Ford has presently begun converting the plant to generate the new trucks, putting in new machinery and resources.

“A lot of products has been going in on the fly,” Hinrichs said. “It’s not what we would classify as a new physique shop, but the investment that is currently being created largely is for tools in the body store and for tooling related with creating the 650 and 750.”

Pickup production

It is unclear how prolonged the Ohio plant will shut down between the Econoline ending and the pickup production starting, Hinrichs said. It will not need as considerably downtime as the 13-week hiatus Ford is taking at its 2 U.S. F-150 plants this 12 months to convert them to produce the new aluminum-bodied versions.

“There will not be important downtime” in Ohio, Hinrichs said. “It’s not as complex as when we go to aluminum on the F-150.”

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