Ford Motor Company (NYSE:F) is moving to tap opportunities in the booming Mexican auto industry, planning $2.5 billion investment in the country. In Mexico, Ford will be able to benefit from cheap labor and enjoy other advantages that come with various free trade agreements in the country.
Of the $2.5 billion budget allocation for investment in Mexico, Ford Motor Company (NYSE:F) intends to put $1.3 billion towards the expansion of its factory in northern Chihuahua State. The company plans to build two diesel engines at the revamped plant. Another $1.2 billion will be channeled to a transmission factory in the central Guanajuato state.
New investment as Ford marks 90 years
The planned investment in Chihuahua State is expected to lead to the creation of some 4,000 new jobs, according to sources. Ford Motor Company (NYSE:F) has not been able to publicly disclose its fresh investment plans for Mexico. However, more details about the new investment are expected later this Friday when the company will be marking its 90th anniversary in Mexico. The anniversary celebration is expected to be attended by President Enrique Pena Nieto.
Last major investment in Mexico
In Mexico, Ford Motor Company (NYSE:F) is billed as the fourth-largest vehicle exporter, delivering 108,417 vehicles in 1Q, mostly to the U.S. The last time Ford announced a major investment in Mexico was back in 2008, when the company allocated $3 billion to revamp its factory in Cuautitlan, central Mexico. The plant produces Fiesta model. Ford’s other operations in Mexico is located in Sonora state, where the company builds Lincoln MKZ and Fusion.
Mexico has in the recent years become a preferred manufacturing base for many foreign automakers. The reason for the allure is the country’s free trade agreements, proximity to the U.S. and cheap labor market. Toyota Motors Corp (ADR) (NYSE:TM) is yet another foreign automaker salivating for a larger pie in Mexico’s auto market. The company is planning nearly $1 billion new investment in Mexico to build a plant that will be able to produce 200,000 cars every year.
