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By Paul Wiseman, The Associated Press
Ford will not move the production of a hatchback car to the US from China – despite President Donald Trump's assertion on Sunday that his taxes on Chinese imports mean that the Focus Active can be built in America.
Citing Trump's new rates, Ford announced on Aug. 31 that it was abandoning plans to ship Focus Active from China to the United States.
Trump went to Twitter on Sunday to declare victory and write: "It's only the beginning. This car can now be BUILT IN USA and Ford will not pay any fare!
But in a statement released on Sunday, Ford said it would not be profitable to build the Focus Active in the United States, given annual sales forecasts of less than 50,000.
For the moment, this means that Ford will not simply sell the vehicle in the United States. Kristin Dziczek of the Center for Automotive Research said Ford could manufacture Focuses in many other factories around the world. Therefore, if they decided to continue selling a variant of Focus in the US market, there are several options. States. "
In April, Ford announced plans to stop producing cars in the United States, with the exception of the iconic Mustang, and focus on the most profitable SUVs. He stopped making Focus saloons in May at a plant in Wayne, Michigan. The plan, said analyst Ed Kim, of AutoPacific, was to reduce the Focus range to active wagons and import them from China.
"Without the tariffs, the case was solid for this model in the US market," said Kim.
The demand for small cars in the United States has been declining for years with relatively low gasoline prices and a shift from cars to SUVs and trucks.
If Ford sold less than 50,000 Focus Active cars a year, it would run a US factory with just one shift a day, which is not profitable, Dziczek said. Car manufacturers like to operate factories on at least two shifts, preferably three shifts per day, to cover the plant's construction and equipment costs and to make a profit.
Ford would not want to spend millions on equipment to build the Focus Active here, because at low sales volume, it would not have a good return on investment, said Dziczek.
If sales were high enough to warrant production at a US plant, the price of a compact is not high enough to cover the difference in wages.
"The margins are very thin," said Dziczek. "Even if you had demand and volume, it is still very difficult to build a small car in the United States with profit, which is why you find very little here."
In China, the cost of labor is about $ 8 an hour, including benefits, but it is more than $ 52 an hour in the United States, according to Mr. Dziczek.
Every year, Ford, BMW, Mercedes and others export about 250,000 vehicles from the United States, said Dziczek. Most of them are luxury cars and SUVs with higher profit margins that can cover higher US wages, she said.
For the Focus Active, the tariffs on Chinese vehicles have changed everything. On July 6, the United States imposed a 25% tax on imports of $ 34 billion, including motor vehicles. Last month, he added $ 16 billion worth of Chinese goods to customs duties and is preparing taxes on an additional $ 200 billion. China uses its own tariffs on US products.
The world's two largest economies face US claims that China will deploy predatory tactics – including cybercriminals – to acquire technology from US companies and defy US technological dominance.
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