Canada tried to lure engine plant investment, but Mexico sealed the deal
Ford is expected to announce Friday it will invest $2.5 billion in Mexico to build new engines and transmissions as part of a drive to increase fuel efficiency across its product portfolio.
The announcement is expected to confirm plans to build Ford’s 1.5-liter turbocharged four-cylinder EcoBoost gasoline engine in North America for the first time.
The 1.5-liter engine is currently built in the U.K. and China and is slowly replacing the automaker’s 1.6-liter engine in key vehicles such as the Ford Fusion. Knocking the displacement down a size means paying lower taxes in many countries including China, which will only increase its global popularity.
Reuters first reported that Ford will spend $2.5 billion: $1.3 billion to expand the engine plant in Chihauhau and add 4,000 jobs and another $1.2 billion on a transmission plant in Guanajuato.
“We cannot comment on future product or manufacturing plans,” Ford officials said in a statement.
But three sources confirm the announcement includes production of the 1.5-liter gasoline engine at a plant that also makes a pair of diesel engines.
Last fall union and political officials in Canada tried to convince Ford to build a new global engine in Windsor, but an agreement was not reached on government incentives to sweeten the deal and Ford stuck to its original plan to invest in Mexico.
Ontario Minister of Economic Development Brad Duguid said earlier this year that the engine program was preordained to go to Mexico and though Ontario was given an opportunity to make a pitch, the level of incentives needed would have been unprecedented.
A Windsor-area politician said it would have taken more than $1 billion, including cost savings from workers represented by Unifor (formerly the Canadian Auto Workers) for the city to land a Ford investment of about $1.5 billion to build the 1.5-liter and 1.6-liter small engines to go into vehicles such as the Ford Fusion, Escape and Fiesta ST.
Ford builds the Fiesta subcompact car in Cuautitlán, and its plant in Hermosillo assembles the the Fusion and Lincoln MKZ mid-size cars.
Ford makes 6-speed transmissions in Mexico in a joint venture with Getrag of Germany but may want ownership as part of plans to build additional transmissions in Mexico.
Ford has been working with General Motors to develop 9- and 10-speed transmissions. The 2017 F-15 Raptor, which goes on sale in the fall of 2016, will have a 10-speed transmission.
Mexico has been a magnet for automotive investment as the auto industry continues to grow and increase capacity to meet the highest demand since before the recession.
On Wednesday,Toyota is expected to announce it will spend $1 billion to build its first plant in Mexico with capacity to make about 200,000 Corollas a year.