Ford announced the cancellation of its planned small-car plant in the Mexican state of San Luis Potosi last week, swallowing the costs of construction that had already started at the site, while still more expenses relating to the plant lie in the automaker’s future.
According to Bloomberg, Ford will compensate suppliers that were preparing to supply the San Luis Potosi plant. The total amount that Ford will dole out for the trouble has not been announced, but Ford President of the Americas Joe Hinrichs says it would be “too dramatic.”
“There’s a lot of manufacturing in that area in central Mexico,” Hinrichs says. “So most suppliers are already there anyway. We don’t anticipate any issues, but we’re obviously working with the supply base on that.”
Ford’s decision to pull the plug on its planned, $1.6-billion manufacturing plant in Mexico reportedly came after the automaker looked at the latest sales projections for the Ford Focus compact that was going to be built there, finding them to be lower than originally anticipated. The Focus will instead be moved into the automaker’s existing assembly plant in the Mexican state of Hermosillo, saving $500 million.
“It’s not an easy decision to cancel a plant that you’ve already started,” says Joe Hinrichs. “We don’t take it lightly. It was a big decision to build the plant in the first place and it was a big decision to cancel it.”
The total cost of the canceled plant’s abandoned construction, where the foundation had already been poured and some steel beams erected, will be announced at a future date.