Ford Motor Company President and CEO Mark Fields told investors Tuesday that the automaker is shifting all North American small-car production from the US to Mexico “over the next two to three years,” in an attempt to compensate for the typically-low profit margins of such vehicles with more-affordable labor.
The Detroit Free Press reports that the news comes amidst a cooling auto industry recovery, and constitutes one part of a broader strategy being employed by Ford to drive down production costs on low-margin vehicles. Another part, according to Mr. Fields, is to simplify production.
As an example, the Ford CEO cited the Focus compact, which is currently available in about 300 different configurations once all color and equipment options are considered. He says that Ford wants to bring that number down to 30, making production less-complicated and bringing costs down even further.
Finally, the success of Ford’s small cars moving forward might be affected by the availability of fuel-efficient, electrified powertrains as much as it is by production expenses. The Detroit Free Press reports that Mark Fields reiterated on Tuesday the automaker’s plan to invest $4.5 billion into new hybrid, plugin, and battery-electric vehicles across the small-car, truck, commercial-vehicle, and performance-car segments. The sum will be invested over the course of the next four years, says Fields.