Ford, citing NAFTA, to boost Mexican output

December 17, 1993|By New York Times News Service

DETROIT -- Eager to expand its production capacity and exploit the favorable regulations under the North American Free Trade Agreement, Ford Motor Co. said yesterday that it would build its new compact cars in Mexico as well as the United States and greatly increase its exports to Mexico.

Ford's plans will touch off a series of production shifts in Mexican, Canadian and U.S. factories, the company said, resulting in the creation of the equivalent of 550 jobs in the United States and Canada and 300 jobs in Mexico.

Ford projected that the total number of jobs, or "job equivalents," could climb to 6,000 when additional work at its suppliers' plants in the United States and Canada was taken into account, as well as overtime work.

The announcement by Ford tends to vindicate the stance of the supporters of the trade pact, who had argued that the agreement would add jobs, especially for the automobile industry, which has had its opportunities to do business in Mexico severely constrained.

Ed Hagenlocker, executive vice president of North American operations for Ford, said the actions of the automaker proved that the trade accord would benefit the economies of all three countries.

The United Automobile Workers union, which strongly opposed the trade deal, did not respond immediately to the announcement by Ford.

Because Mexico has imposed tariffs of 20 percent on imported vehicles, as well as complex local content rules, Ford and other automakers have relied mostly on local manufacturers for their sales.

This year Ford will export only about 1,500 cars to Mexico from its plants in the United States and Canada, but next year that number is expected to rise to about 25,000.

Ford projected that its exports to Mexico would rise to 50,000 by 1996. The automaker will add the Lincoln Mark VIII and Ford Escort to the list of models it exports to Mexico.

Moreover, Ford and its parts suppliers now may export parts to Ford assembly plants in Mexico at a greatly reduced cost. Next year, the Mexican tariff will decline to 10 percent on cars, and be eliminated after 10 years. Tariffs on trucks will be eliminated after five years.

NAFTA was just one important factor in Ford's decision, the company said. The other was the very tight capacity at the company since the mid-1980s.

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