Ford Adds $350 Million in Investments Amid Fanfare by Trump -- 2nd Update
March 28 2017 - 11:55AM
Dow Jones News
By Christina Rogers and John D. Stoll
Ford Motor Co. outlined investments in three Michigan factories
that include $200 million to build a new data-storage center and an
extra $150 million to retool a small-car plant to build pickup
trucks and sport-utility vehicles.
President Donald Trump early Tuesday trumpeted the commitments
on Twitter, spotlighting U.S. manufacturing and jobs investments as
he faces a historically low approval rating, probes of alleged ties
between his campaign and Moscow, and a major legislative defeat on
health care last week.
While Mr. Trump portrayed Ford's moves as supporting U.S. jobs,
much of the Dearborn, Mich., auto maker's commitments had been
previously disclosed as part of a 2015 labor agreement with the
United Auto Workers union. Ford on Tuesday highlighted a total of
$1.2 billion of commitments to Michigan factories, of which $850
million had been previously outlined.
The company is seeking a $30 million tax-incentive package from
the state of Michigan for planned upgrades, said Ford's North
American chief Joe Hinrichs.
Ford on Tuesday confirmed it would begin retooling a factory in
Wayne, Mich., next year to build a new Ranger pickup and Bronco
sport-utility vehicle, adding another $150 million to the $700
million it committed to the project two years ago in the union
contract. Ford also reaffirmed $150 million in spending it had
outlined in that contract to expand another local engine plant.
The auto maker plans to begin building the new pickup trucks at
the 3,600-worker Wayne factory in late 2018 with production rising
through 2020 as it adds the SUV manufacturing.
In addition, Ford again highlighted $700 million pledged in
January to convert another Michigan plant to build electric and
autonomous cars, creating 700 jobs.
"These announcements encapsulate all that is going on with our
business now and in the future," Mr. Hinrichs said in an
interview.
Ford's new $200 million investment is for the second of two
data-storage centers that aim to prepare for a future of
increasingly connected and computerized cars. The company is
investing billions of dollars to develop electric vehicles and
self-driving cars, aiming to keep pace with Silicon Valley rivals
looking to upend the traditional auto business.
The planned investments come as Ford's U.S. sales growth has
stalled amid a broader industry slowdown following seven years of
uninterrupted growth.
Ford, coming off a string of record profits, is already
predicting a tougher road ahead. The company expects full-year
adjusted operating profit to fall 14% this year to $9 billion
because of higher costs and continued investment in new
technologies.
Ford also warned last week that first-quarter earnings per share
would be between 30 cents and 35 cents, lower than the prior-year
period and far below analysts' expectations of 47 cents. The
company is facing numerous headwinds, including higher engineering
costs, a strong dollar, rising warranty expenses and
commodity-price increases.
Ford in 2015 committed about $5 billion in investments for
Michigan factories, including facilities making components. Those
investments, part of about $9 billion the union said the company
had pledged to invest, were to roll out over the life of the
four-year contract, expiring in 2019.
"Major investment to be made in three Michigan plants," Mr.
Trump's tweet said Tuesday before Ford's announcement. "Car
companies coming back to U.S. JOBS! JOBS! JOBS!"
The announcement follows Mr. Trump's visit to Michigan earlier
in March to announce a review of federal emissions standards that
many auto makers characterize as stringent. During that visit, Mr.
Trump said to expect a big announcement coming from an auto
maker.
The move hands a positive talking point to Mr. Trump following
last week's failure by House Speaker Paul Ryan to get backing for a
bill to repeal and replace the Affordable Care Act, President
Barack Obama's signature health-care legislation.
Mr. Trump, once a critic of Ford's plans for producing small
cars in Mexico, has recently held up the auto maker as an example
of a company adding jobs in the wake of the November election. The
company recently shelved its plan to build a new plant in Mexico
and said it was rerouting investment to the Michigan plant that it
plans to convert to build electric vehicles.
Mr. Trump, whose popularity with working-class voters helped
propel him to the White House, has blasted the auto industry for
importing cars for sale in the U.S., arguing it is coming at the
expense of American jobs. That has put auto-industry executives on
the defensive and led them to announce new investment in U.S.
plants, even though some of the plans had already been in the
works. At the same time, auto makers have in recent months
continued to boost output from plants in Mexico, amid strong U.S.
demand for popular pickups and sport-utility vehicles made
there.
Write to Christina Rogers at christina.rogers@wsj.com and John
D. Stoll at john.stoll@wsj.com
(END) Dow Jones Newswires
March 28, 2017 11:40 ET (15:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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