The Ford Motor Co on Friday unveiled a US$2.5 billion investment for engine and transmission plants in Mexico, the second major project announced in the country by a foreign auto power this week.
The US firm’s plan to expand an engine plant in the northern border state of Chihuahua and build a transmissions factory in the central state of Guanajuato will create 3,800 jobs, the company said.
The investment was announced by Ford president for the Americas region Joseph Hinrichs and Mexican President Enrique Pena Nieto at the Mexican leader’s official residence in Mexico City.
Just two days earlier, Pena Nieto had invited Toyota Motor Corp executives to his residence for the Japanese auto giant’s announcement that it was ending a new plant freeze with a US$1 billion factory in Guanajuato to produce the Corolla sedan.
The back-to-back announcements “prove to the world that Mexico has conditions for competitiveness, conditions to be more productive and conditions to attract more investments,” Pena Nieto said.
“This makes the world turn to look at Mexico,” he said.
Mexicans officials said the new investments will boost the country’s goal of becoming a top five auto producer in the world by 2020, producing 5 million vehicles per year.
The auto industry’s growing success brought the government much-needed good news as falling oil prices have led to budget cuts and a reduction of economic forecasts for this year, from between 3 and 4 percent growth to between 2.5 and 3.5 percent.
Mexico overtook Brazil last year to become the top auto producer in Latin Americans and the seventh-biggest in the world. It is the sixth producer of auto parts in the world.
Mexico produced more than 3.3 million vehicles last year, about 500,000 fewer than No. 6 power India.
It also surpassed Japan as the top exporter of vehicles to the US last year, and analysts say it is closing in on first-placed Canada.
Mexican Minister of the Economy Ildefonso Guajardo said that since Pena Nieto took office in December 2012, the government has announced US$22.6 billion in auto-sector investments.
“It has been a perfect week for the Mexican automobile industry,” Guajardo said.
Ford said the new US$1.1 billion gasoline-powered engine facility is to be built within Ford’s plant in the northern border state of Chihuahua to boost engine exports to the US, Canada, South America and the Asia-Pacific region.
The company will also spend US$200 million to expand the Chihuahua plant’s production of I-4 and diesel engines, he said, turning the facility into the biggest engine plant in Mexico.
Mexican Auto Industry Association president Eduardo Solis said it was too soon to know whether Mexico’s production will surpass other countries soon, but that it the sector will keep growing.
“More investments are coming,” Solis said. “We expect more announcements in the future.”
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