President-elect Donald Trump talks to factory workers in Indianapolis. File photo: AP

Flat Rock,  Michigan - The car industry's relationship with president-elect Donald Trump took a dramatic turn on Tuesday as Ford decided to move a planned investment in a Mexican plant to the US, while Trump threatened General Motors with a tax on some imported small cars.

Ford is canceling plans to build a new $1.6 billion (R22 billion) factory in San Luis Potosi, Mexico, and instead will invest some of that money in an American plant that will build new electric and autonomous cars.

Ford said in 2015 it would move production of the Focus from Michigan to San Luis Potosi, but Trump repeatedly criticised the plan, including Ford among the companies he threatened to hit with a 35 percent tariff on products made in Mexico and exported to the US - and adding General Motors to that list on Tuesday, saying in a tweet the Cruze hatchbacks that GM builds in Mexico and sends to US dealers could face "a big border tax!"

Ford boss Mark Fields said on Tuesday the company's decision not to build the San Luis Potosi plant was dictated by market forces. Low fuel prices and interest rates have hammering small car sales; domestic sales of the Focus were down 17 percent for the year to November while, by contrast, sales of Ford's biggest SUV, the Expedition, were up 46 percent.

'Remember your promise' 

Ford will still move production of the Focus to Mexico, but it will go to an existing plant in Hermosillo that makes medium sedans, while the plant in Wayne, Michigan, that currently used to produce Focus will begin making two new cars in 2018, preserving jobs there.

Fields said Ford would invest $700 million (R9.6 billion) in the Flat Rock plant to make hybrid, electric and autonomous vehicles, and would also hire about 700 workers, starting in 2018. He also reminded Trump of his promise to make the US more competitive by lowering taxes and easing regulations.

Workers lined up on the factory floor cheered the news. Flat Rock, which employs about 3200 people, was threatened with closure during the recession. More recently, it has seen temporary layoffs because of slowing sales of the Mustang, which is built there.

GM under threat from the the Donald

Trump issued his threat to GM just hours before Ford's announcement. GM countered that Cruze sedans sold in the US are built in Ohio - only a small number of Cruze hatchbacks are imported to the US from Mexico.

Among the new vehicles the Flat Rock plant will make is an electric SUV that will go 480km on a charge, due to go on sale in 2020. The plant also will make a hybrid autonomous vehicle that's scheduled to be released in 2021.

Ford also said on Tuesday it would release a hybrid version of its best-seller, the F-150 pickup, and a hybrid version of the Mustang in 2020. Two new hybrid police vehicles also are coming over the next five years.


Like us on Facebook

Follow us on Twitter