Ford to Invest $700 Million to Possibly Build Fusions In Canada, While VW Puts $529 Million Into Brazil to Locally Build Audis and Golfs

by TTAC Staff

February 18th, 2014 12:33 AM

ford to invest 700 million to possibly build fusions in canada while vw puts 529

Ford Oakville, Ontario, Canada Assembly Plant

The Toronto Star is reporting that Ford Motor Co. will soon announce a ~$700US million investment in it’s Oakville, Ontario plant, where it assembles the Ford Edge and Lincoln MKX midsize crossovers. According to Toronto’s Globe and Mail newspaper, $135 million of that will come from the Ontario and Canadian governments, which recently divested some of their bailout related shares in General Motors. The investment by Ford follows commitments made to the Canadian Auto Workers, now under the banner of Unifor, to add 600 jobs to the Oakville facility.

The next generation Flex and MKX will share the CD4 platform with the Fusion and MKZ sedans. The investment means that Oakville will have the capability to build cars based on CD4 which raises the possibility that the plant may join Hermosillo, Mexico and Flat Rock Michigan in building FoMoCo’s midsize sedans. Ford recently added Fusion production at Flat Rock to increase supply of the car, which has been in short supply.

Automobile operations in Canada are jeopardized by the country’s current status as the world’s most expensive place to build cars. In addition to the Oakville plant, Ford operates two engine plants in Windsor, across the Detroit River from Dearborn.

To keep costs down, after the CAW ratified the current 4 year contract Ford offered 1,000 hourly workers incentives to retire. New hires to replace those retirees will start at a lower hourly pay rate and not reach the current full rate for 10 years.

Volkswagen Group Plant, Sao Jose dos Pinhais, Parana, Brazil

Meanwhile, the Volkswagen Group pl ans to spend 1.2 billion reais ($529US million) in Brazil to restart local assembly of Audis and begin local production of the VW Golf, according to a spokesman for the Brazilian state of Parana.

Fifty million reais will go to expand VW’s factory at Sao Jose dos Pinhais in order to start assembly of Audi’s A3 compact sedan and Q5 compact SUV in 2015. A3 capacity is planned to be 26,000 units annually by 2018. The same factory will receive a 700 million real investment to prepare it to start building the latest Golf model.

Brazil’s federal government recently raised taxes on imported vehicles while offering tax incentives to automobile manufacturers that increased local investments. BMW had earlier announced a $267 million investment in a factory in the southern state of Santa Catarian, with a capacity of 30,000 units, starting production there in late 2014. Luxury sales in Brazil have increased due to rising wages for highly skilled professionals, persuading Audi to once again build cars locally. Audi had previously assembled A3s at the Parana plant from 1999 to 2006.

#Brazil #Canada #CAW #Ford #Oakville #Unifor #VW

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6 of 23 comments

Big Al from Oz on Sep 18, 2013

I hope this works out for Brasil. Brasil recognises UNECE regs, but isn't a signatory yet, just like the Chinese. I think that's good for the country. Once Brazil is a UNECE signatory it will have to produce 'better' vehicles it will be able to export like Thailand. Globally, Sergio would like this as well. Another area of improvement for the Brasilian's is the desperate restructuring requirement of it's taxation system. The layers of complex taxes/regulations increases cost significantly. Just building factories doesn't give success. I hope Brasil can improve it's current economic position before it to late...........again. As for Canada, it seems the Canadians are stuck doing whatever it's dominant trading partner to the south wants. Canada being more aligned to a commodity currency means the value of the CAD is high. Will Canada eventually end up like Australia? Especially if labour costs increase with some of the superannuation schemes becoming available. I did read that some wages will rise from approx. $17per hour to over $32 per hour. Someone pays for this, the consumer? Or will the Canadian government increase subsidisation and gradually increase protection as much as the US does to protect it's market. I do hope Ford has made the right decision, not some short-medium term decision through political pressure, ie, government/union. Remember, there's lots of political tinkering with these kind of plans. $700 million, how much of this is Ford money, not government or government interest free loans (subsidised again).

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- Marcelo de Vasconcellos on Sep 18, 2013
  
  hey Big Al, this time Brazil is trying something more intelligent. It is using a sticks and carrots scheme that aims to bring not just factories but mainly technology. If it works, in time there'll be the infrastructure to export no t only cheap cars, but real world class cars.
  
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- Wmba on Sep 18, 2013
  
  Far be it for me to educate the world's most well-known and erudite automotive industry critic, but I'll try. Did you read the article? Why are you asking what subsidy Ford is getting? It's right there. $135 million out of a total $700 million. Ford is the number 1 seller in Canada. Ford F150 is best selling vehicle, Fusion is number 1 midsize. And so on. Canadian pricing is 15 to 20% more than the same vehicle in US, for virtually all manufacturers. Thus, we pay extra to subsidize Canadian-built cars sent to the US. And just to make sure, we more than double freight costs compared to the US. Honda Accord from Ohio to Alaska, $895. Honda Accord across the lake to Toronto, $1695. And CNR does most of the hauling. A blatant ripoff by manufacturers, none of whom lose a single cent building and selling cars here in Canada. Quite the opposite. Sure they cry poor - but it's a load of codswallop. Just another bargaining chip in the haze of misinformation endemic to vehicle manufacturers that politicians everywhere fall for everytime without fail. Canada's import duty on foreign made vehicles from outside NAFTA is 6%. Has been for decades. The US is 1.8%. As for Brazil, they're running down a rathole with their tariffs. Marcelo's rationalizations are right out of the playbook that nations used a 100 years ago. Quite why Air Canada bought Embraers is beyond me. Oh wait, I know, subsidized cheap export pricing paid for by tariffs on the other end. Thankyou, Brazilian taxpayer.
  
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- MPAVictoria on Sep 18, 2013
  
  @wmba "Marcelo’s rationalizations are right out of the playbook that nations used a 100 years ago." Yep. Which is why they are working. No country since Great Britain has successfully industrialized without tariff walls. You neo-liberal radicals will be the death of us all if you keep power.
  
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Jimbob457 on Sep 18, 2013

There are so many trade barriers related to motor vehicles around the world, I doubt anyone knows them all. Some of them make good economic sense for everyone. Others don't. "Some folks rob you with a six-gun, others with a fountain pen." Currently, the biggest give away is China's export led growth stimulated by its undervalued currency. Irony abounds. One of the poorer nations on earth is subsidizing the richest nations on earth with cheap exports - the so-called 'China price'.

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- Big Al from Oz on Sep 18, 2013
  
  So true But wealthier nations just can't stick their heads in the sand and create insular trade. The problem confronting the OECD economies is that the developing nations total GDP is now equivalent to ours. He who controls trade has the power. The US is losing out in this position. It will now have to come to a consensus more often than not will world politics and trade. Look at the current Mid East situation. To the comment on old Brittania. Did it work very well? The Ancient Romans did it much better. The US's exaggerated trade and political position was always relatively temporary. WWII 'artifically' inflated the US's position globally. Now we are truly leaving behind the damage of WWII, especially over the past 20 years. Even the Chinese situation if from that era.
  
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