Ford works a plan to compensate suppliers involved with canceled plant

12 January, 2017

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Ford Motor Co. works a plan to compensate suppliers that were preparing to serve the plant the company canceled last week. The company will also return the land to the government of Mexico, an executive said to Bloomberg at the Automotive News World Congress in Detroit.

The foundation was poured and some steel beams were going up at the site of the small-car factory, Joe Hinrichs, Ford’s president of the Americas, told reporters.

“It’s not an easy decision to cancel a plant that you’ve already started,” Hinrichs said after a speech. “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.”

Ford told Mexico’s government of its intent to scrap the $1.6 billion small-car factory just hours before making the decision public. The Dearborn, Michigan-based company now plans to build Focus compacts at its existing plant in Hermosillo, Mexico.

Executives made the decision when they saw the latest sales projections for the car were lower than anticipated, Hinrichs said.

The cost to compensate suppliers won’t be “too dramatic,” Hinrichs said. “There’s a lot of manufacturing in that area in central Mexico. 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 had erected a steel skeleton at the Mexico site for the paint shop structure, Hinrichs said. He declined to say, for now, how much Ford had spent on construction that began last spring.

MexicoNow

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