De­spite Trump tweet, Ford says it won’t make hatch­back in US

Ripon Bulletin - - Nation -

WASHINGTON (AP) — Ford won’t be mov­ing pro­duc­tion of a hatch­back wagon to the United States from China — de­spite Pres­i­dent Don­ald Trump’s claim Sun­day that his taxes on Chi­nese im­ports mean the Fo­cus Ac­tive can be built in Amer­ica.

Cit­ing Trump’s new tar­iffs, Ford on Aug. 31 said it was drop­ping plans to ship the Fo­cus Ac­tive from China to Amer­ica.

Trump took to Twit­ter Sun­day to de­clare vic­tory and write: “This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tar­iffs!”

But in a state­ment Sun­day, Ford said “it would not be prof­itable to build the Fo­cus Ac­tive in the U.S.” given forecast yearly sales be­low 50,000.

For now, that means Ford sim­ply won’t sell the ve­hi­cle in the United States. Kristin Dz­iczek of the Cen­ter for Au­to­mo­tive Re­search said that Ford can make Fo­cuses “in many other plants around the world, so if they de­cided to con­tinue to sell a Fo­cus vari­ant in the U.S. mar­ket, there are sev­eral op­tions other than build­ing it in the United States.”

In April, Ford an­nounced plans to stop mak­ing cars in the United States — ex­cept for the iconic Mus­tang — and to fo­cus on more prof­itable SUVs. It stopped mak­ing Fo­cus sedans at a Wayne, Michi­gan, plant in May. The plan, said in­dus­try an­a­lyst Ed Kim of Au­toPa­cific, was to pare down the Fo­cus lineup to Ac­tive wag­ons and im­port them from China.

“With­out the tar­iffs, the business case was pretty solid for that model in the U.S. mar­ket,” Kim said.

De­mand for small cars in the U.S. has been wan­ing for years with rel­a­tively low gaso­line prices and a shift from cars to SUVs and trucks.

If Ford sold fewer than 50,000 Fo­cus Ac­tive wag­ons per year, it would run a U.S. fac­tory on only one shift per day, which isn’t cost-ef­fec­tive, Dz­iczek said. Au­tomak­ers like to run plants on at least two shifts, and prefer­ably three per day to cover the cost of build­ing and equip­ping the fac­tory, and to turn a profit.

Ford also wouldn’t want to spend mil­lions on equip­ment to build the Fo­cus Ac­tive here be­cause at low sales vol­umes it wouldn’t get a good re­turn on its in­vest­ment, Dz­iczek said.

If sales were high enough to jus­tify pro­duc­tion at a U.S. plant, the price of a com­pact ve­hi­cle isn’t high enough to cover the dif­fer­ence in wages here, she said.

“The mar­gins are very slim,” Dz­iczek said. “Even if you had de­mand and vol­ume, it’s still very dif­fi­cult to build a small car in the U.S. prof­itably, which is why you find very few of them here.”

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