[DETROIT] Ford Motor Co, criticized by Republican presidential front-runner Donald Trump for manufacturing outside the United States, announced on Tuesday that it would invest US$1.6 billion to build more small cars in Mexico, starting in 2018.
The automaker made the announcement as Mr Trump, US Senator Ted Cruz of Texas and Ohio Governor John Kasich competed in a crucial primary in Wisconsin.
Mr Trump, who has criticized US companies for "sending jobs to Mexico," has singled out Ford for some of his harshest remarks.
A senior Mexican official said Mexico had stepped back from a high-profile announcement on the Ford plant to avoid stoking tensions in the US election debate stemming from Mr Trump's comments.
Joe Hinrichs, Ford executive vice president and head of the Americas, said on Tuesday that the automaker is investing more money in Mexico "to improve our small-car profitability." Mr Hinrichs declined to say what products Ford plans to build at the San Luis Potosi plant, which is slated to open in 2018 and will employ 2,800 by 2020.
US supplier sources have said the plant is expected to build the next-generation Ford Focus compact, as well as a Focus-based hybrid gasoline-electric model aimed at rival Toyota Motor Corp and described as a "Prius fighter." The investment had been rumoured for months.
Ford joins a growing list of automakers investing billions in new production capacity in Mexico, where lower labour costs and favourable currency exchange mean companies have a better chance of turning a profit on low-margin small cars.
Two weeks ago, Ford Chief Executive Mark Fields defended the automaker's investment strategy, saying: "We are a global, multinational company. We will invest to keep us competitive and we will do what makes sense for the business." At the time, he did not comment directly on reports about the planned Mexico investment.
During contract talks last summer, Ford confirmed that it would move Focus production out of its Wayne, Michigan plant in 2018. The United Auto Workers said at the time that Ford planned to build the next Focus in Mexico.
Mr Hinrichs on Tuesday reiterated that Ford is planning to build two new vehicles at the Wayne plant, beginning in 2018, but declined to provide details.