Ford Raises Spending in Michigan -- WSJ

Auto maker to build data-storage center, ready plant to make pickups and SUVs

By Christina Rogers and John D. Stoll 

Ford Motor Co. outlined investments in three Michigan factories that include $200 million to build a data-storage center and an extra $150 million to retool a small-car plant to build pickup trucks and sport-utility vehicles.

President Donald Trump early Tuesday heralded the commitments on Twitter, spotlighting U.S. manufacturing and jobs investments as he faces a historically low approval rating, probes of alleged ties between his campaign and Moscow, and a major legislative defeat on health care last week.

While Mr. Trump portrayed Ford's moves as supporting U.S. jobs, much of the Dearborn, Mich., auto maker's commitments had been previously disclosed as part of a 2015 labor agreement with the United Auto Workers union. Ford on Tuesday highlighted a total of $1.2 billion of commitments to Michigan factories, of which $850 million had been previously outlined.

The company is seeking $30 million in tax incentives over 15 years from the state of Michigan for planned upgrades, Ford Americas chief Joe Hinrichs said.

Ford said Tuesday it would begin retooling a factory in Wayne, Mich., next year to build new Ranger pickup trucks and Bronco sport-utility vehicles, adding a further $150 million to the $700 million that the company committed to the project two years ago in the union contract. Ford also reaffirmed $150 million in spending it had outlined in that contract to expand another local engine plant.

The auto maker plans to begin building the pickup trucks at the 3,600-worker Wayne factory in late 2018, with production rising through 2020 as the company adds the SUV manufacturing.

In addition, Ford again highlighted $700 million pledged in January to convert another Michigan plant to build electric and autonomous cars, creating 700 jobs.

"These announcements encapsulate all that is going on with our business now and in the future," Mr. Hinrichs said in an interview.

Ford's new $200 million investment is for the second of two data-storage centers that aim to prepare for a future of increasingly connected and computerized cars. The company is investing billions of dollars to develop electric vehicles and self-driving cars, aiming to keep pace with Silicon Valley rivals looking to upend the traditional auto business.

Ford said the previously announced expansion of the engine plant would create or retain 130 jobs without specifying how many of those were new. The auto maker didn't say whether the new investments announced Tuesday would create any jobs.

The planned investments come as Ford's U.S. sales growth has stalled amid a broader industry slowdown after seven years of uninterrupted growth.

Ford, coming off a string of record profits, is already predicting a tougher road ahead. The company expects full-year adjusted operating profit to fall 14% this year to $9 billion because of higher costs and continued investment in new technologies.

Ford also warned last week that first-quarter earnings per share would be between 30 cents and 35 cents, lower than the prior-year period and far below analysts' expectations of 47 cents. The company is facing numerous headwinds, including higher engineering costs, a strong dollar, rising warranty expenses and commodity-price increases.

Ford in 2015 committed about $5 billion in investments for Michigan factories, including facilities making components. Those investments, part of about $9 billion the union said the company had pledged to invest, were to roll out over the life of the four-year contract, expiring in 2019.

"Major investment to be made in three Michigan plants," Mr. Trump's tweet said Tuesday before Ford's announcement. "Car companies coming back to U.S. JOBS! JOBS! JOBS!"

The announcement follows Mr. Trump's visit to Michigan earlier in March to announce a review of federal emissions standards that many auto makers characterize as stringent. During that visit, Mr. Trump said to expect a big announcement coming from an auto maker.

The move hands a positive talking point to Mr. Trump after last week's failure by House Speaker Paul Ryan to get backing for a bill to repeal and replace the Affordable Care Act, President Barack Obama's signature health-care legislation.

Mr. Trump, once a critic of Ford's plans for producing small cars in Mexico, has recently held up the auto maker as an example of a company adding jobs in the wake of the November election. The company recently shelved its plan to build a new plant in Mexico and said it was rerouting investment to the Michigan plant that it plans to convert to build electric vehicles.

Mr. Trump, whose popularity with working-class voters helped propel him to the White House, has blasted the auto industry for importing cars for sale in the U.S., arguing those moves are coming at the expense of American jobs. That has put auto-industry executives on the defensive and led them to announce new investment in U.S. plants, even though some of the plans had already been in the works. At the same time, auto makers have in recent months continued to boost output from plants in Mexico, amid strong U.S. demand for popular pickups and sport-utility vehicles made there.

Write to Christina Rogers at [e-mail] and John D. Stoll at [e-mail]

(END) Dow Jones Newswires

March 29, 2017 02:47 ET (06:47 GMT)

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