Ford to unveil $2.5 billion Mexico investment on Friday, report says
April 14, 2015 - 12:58 pm ET -- UPDATED: 4/14/15 2:04 pm ET - adds diesel background
MEXICO CITY/DETROIT (Reuters) -- Ford Motor Co. this Friday plans to announce an investment of about $2.5 billion in Mexico, industry sources told Reuters, in the latest multi-billion dollar outlay in the country's booming auto sector.
Ford will invest $1.3 billion to expand its plant in northern Chihuahua state, where it will build two new diesel engines, with another $1.2 billion destined for a transmission plant in central Guanajuato state, the sources said.
The U.S. automaker will announce the investment in Mexico City on Friday to celebrate the 90th anniversary of its presence in Mexico. President Enrique Pena Nieto will attend the event.
A Mexican official said the Chihuahua investment would probably create about 4,000 jobs.
A Ford spokeswoman in Detroit declined to comment.
Mexican business newspaper El Economista reported that supplier Getrag would be partnering with Ford on the transmission plant.
Ford engine plans
Ford currently builds two large diesel engines in Mexico, a 6.7-liter V-8 turbo used in Fordís Super Duty trucks, and a smaller 4.4-liter turbo V-8 used exclusively by Land Rover in the Range Rover luxury SUV. That smaller engine, once destined for the F-150, was cancelled due to cost and emissions concerns.
Raj Nair, Fordís product development chief, has not ruled out a diesel engine for the F-150. But likely it would not be a V-8. The latest generation aluminum-bodied F-150 weighs as much as 700 pounds less than the old steel-bodied truck, meaning that it could get by on a smaller diesel engine, likely a V-6.
Ramís hot-selling EcoDiesel 1500 uses a 3.0-liter V-6 and owns the fuel economy crown in the pickup segment at 29 mpg highway. Chevrolet, GMC and Nissan have also announced diesel engines for their trucks, a 4-cylinder for the Colorado and Canyon, and a Cummins V-8 for the new full-size Nissan Titan. That leaves Ford and Toyota as the only two truck brands without a diesel engine.
Building a diesel engine for the F-150 in North America would make economic sense for Ford because it could also be used in the Euro-styled Transit van, which has an optional 5-cylinder diesel imported from South Africa. The 5-cylinder diesel is an old engine at the end of its development life.
AutoPacific analyst Dave Sullivan said he believes Ford will use the diesel engine in the Transit. He also said the second engine could replace the current 6.7-liter Powerstroke V-8 diesel engine.
Ford spokesman Mike Levine would not comment on the companyís powertrain plans for the F-150. But analysts widely expect Ford to offer a diesel engine in the F-150 along with the coming 10-speed automatic transmission, giving Ford segment leadership in fuel economy.
Ford is Mexico's fourth-largest auto exporter, according to official industry figures, selling 108,417 units abroad during the first quarter. The majority of those units were shipped to the United States.
Ford announced its last major investment in Mexico in 2008, $3 billion to update its Cuautitlan plant in central Mexico to produce its popular Fiesta model.
The company also has a factory in the northern state of Sonora, where it produces the Fusion subcompact and the high-end Lincoln MKZ.
In recent years, foreign automakers have expanded their presence in Mexico, lured by its cheap labor, myriad free trade agreements and proximity to the United States.
On Monday, Reuters reported that Toyota Motor Corp. would spend $1 billion to build a new factory in Mexico, producing 200,000 cars a year, and planned to announce the investment on Wednesday.