Ford announced that it will be investing $1.6b in San Luis Potosi in Mexico to build small cars.
Construction of this factory is expected to begin in mid-2016 and the production is scheduled to begin in 2018.
The American automaker said that this investment would create 2800 jobs by 2020. With this move, production of small cars will move from its Michigan plant to San Luis Potosi in Mexico.
Ford will announced later this year which vehicles to be produced at the facility. Vehicles produced in Mexico will be supplied to customers in the U.S., Canada, China, Argentina, Bolivia, Brazil, Colombia, Chile, Paraguay, Peru, Uruguay and South Korea.
According to reports, Ford is planning to move small car production out of US to countries such as Mexico. It would be economical to produce them with $8 per hour wage in Mexico and retain production of pricey luxury models and SUVs in US where wages for veterans can reach $60 per hour.
United Automobile Workers (UAW) union president Dennis Williams said: Today's announcement that Ford is investing in Mexico is a disappointment and very troubling.
"For every investment in Mexico it means jobs that could have and should have been available right here in the USA.
"This is another example of what's wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States. Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.
As reported by Detroit Free Press, Ford CEO Mark Fields responded by saying: "We are a global, multinational company and we will invest to keep us competitive and we will do what makes sense for the business."
Ford president and Americas executive vice president Joseph Hinrichs said: "We have to make decisions on a global scale because we compete globally."
"But let's be clear: We are a proud American company and the majority of our investment happens here in the U.S."
Hinrichs also mentioned that Ford has employed more than 25,000 workers in US over the past five years and makes more cars than any other automaker.
He also said that investment in Mexico will not result in job loss in US. Mexico stands fourth in Ford's manufacturing only after the US, China and Germany.
Hinrichs also reminded that Ford entered into contract with UAW to invest $9b in US manufacturing sites and to create or retain about 8500 jobs over the next four years.
Image: A worker at Ford Cleveland's plant. Photo: Courtesy of Ford.
