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Ford Finally Confirms That Small Car Production Is Heading To Mexico
William Maley posted an article in Ford
Ford has finally confirmed that it will be moving small car production in the U.S. to Mexico in the next two to three years. This information isn't new as we knew about it a year ago thanks to a new contract with the UAW. We learned that in 2018, the Ranger would be taking up residence at the Michigan Assembly plant, home currently home to the Focus and C-Max. Why is Ford moving small car production to Mexico? It comes down to costs. With low gas prices, consumers are buying up crossovers and trucks at a rapid rate. This means small cars are sitting on dealer lots, costing automakers money. “Every global manufacturer has to determine how it can best create revenue and limit expenses. Small vehicles are the most price-sensitive, so any cost-savings that can be gained offer competitive advantages. Thus moving production to a lower-labor-cost country makes particular economic sense for small cars,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book. It doesn't hurt that labor costs in Mexico are significantly less than those in the U.S. The Detroit News reports that workers earn the equivalent of $8 to $10 an hour, compared to the $29 an hour top-tier workers in the U.S earn. “I don’t think it’s all doom and gloom. It’s a reflection of the shrinking market share for compact cars,” said Dave Sullivan, manager of product analysis for research firm AutoPacific. But you have to wonder if Ford could have handled this better. Especially when Presidental candidate Donald Trump ripped into Ford for this decision, vowing to put a 35 percent tariff on Ford vehicles if elected. Source: The Detroit News -
Ford has finally confirmed that it will be moving small car production in the U.S. to Mexico in the next two to three years. This information isn't new as we knew about it a year ago thanks to a new contract with the UAW. We learned that in 2018, the Ranger would be taking up residence at the Michigan Assembly plant, home currently home to the Focus and C-Max. Why is Ford moving small car production to Mexico? It comes down to costs. With low gas prices, consumers are buying up crossovers and trucks at a rapid rate. This means small cars are sitting on dealer lots, costing automakers money. “Every global manufacturer has to determine how it can best create revenue and limit expenses. Small vehicles are the most price-sensitive, so any cost-savings that can be gained offer competitive advantages. Thus moving production to a lower-labor-cost country makes particular economic sense for small cars,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book. It doesn't hurt that labor costs in Mexico are significantly less than those in the U.S. The Detroit News reports that workers earn the equivalent of $8 to $10 an hour, compared to the $29 an hour top-tier workers in the U.S earn. “I don’t think it’s all doom and gloom. It’s a reflection of the shrinking market share for compact cars,” said Dave Sullivan, manager of product analysis for research firm AutoPacific. But you have to wonder if Ford could have handled this better. Especially when Presidental candidate Donald Trump ripped into Ford for this decision, vowing to put a 35 percent tariff on Ford vehicles if elected. Source: The Detroit News View full article
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In under 24 hours, the rumor has become reality. Nissan will acquire 34 percent of Mitsubishi Motors for 237 billion yen (about $2.17 billion). This makes Nissan the single-largest shareholder in the automaker. Speaking at a press briefing announcing the deal, Nissan CEO Carlos Ghosn said this alliance will cover purchasing, common platforms, joint manufacturing, technology development, and target shared cost savings. The alliance will also contribute management expertise to help Mitsubishi regain public trust. “It represents a win-win. We believe in the potential of Mitsubishi Motors,” said Ghosn. In statements from the two companies, an agreement will be signed by May 25th where Nissan can name four directors to the Mitsubishi Motors board. Nissan can also name one of their directors as a chairman for Mitsubishi. Osamu Masuko, chairman of Mitsubishi Motors explained the two companies have been discussing ways to extend their partnership for some time. Mitsubishi and Nissan currently have a deal concerning minicars. When the scandal came to light, the talks accelerated. “We had to do something quite daring. It is not an easy task to restore trust,” said Masuko. Makuko also notes that a takeover like this would have happened sooner or later due to Mitsubishi lacking the resources to compete effectively on its own. “This would have happened one day,” he said. This deal does open Nissan to possible issues concerning the problems facing Mitsubishi and how much money will need to be spent. Ghosn explained that Mitsubishi was very open about the scale of problems it faces and that Nissan would only complete the deal after it has done an investigation into the investment. Source: Automotive News (Subscription Required), New York Times, Mitsubishi, Nissan Press Release is on Page 2 Nissan and Mitsubishi Motors forge strategic alliance; Nissan to take 34% stake in Mitsubishi Motors for 237 billion yen YOKOHAMA and TOKYO, Japan – Nissan Motor Co., Ltd., (“Nissan”), and Mitsubishi Motors Corporation, (“MMC”) announced that they have signed a Basic Agreement today to form a far-reaching strategic alliance between the two Japanese automakers. Following an MMC share issue, Nissan will take a 34 percent equity stake in MMC for 237 billion yen. The strategic alliance will extend an existing partnership between Nissan and MMC, under which the two companies have jointly collaborated for the past five years. Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets. Carlos Ghosn, chief executive and president of Nissan, said: “This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects. We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family.” Osamu Masuko, chairman of the board and chief executive of MMC, said: “Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximizing the benefits from alliance partnerships. This agreement will create long-term value needed for our two companies to progress towards the future. We will achieve long term value through deepening our strategic partnership including sharing resources such as development, as well as joint procurement.” Under the terms of the transaction, Nissan will purchase 506.6 million newly issued MMC shares at a price of 468.52 yen per share. The price per share reflects the volume weighted average price over the period between April 21, 2016 and including May 11, 2016. Nissan will become the largest shareholder of MMC on closing. MMC and Nissan expect Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo – Mitsubishi UFJ to maintain a significant collective ownership stake in Mitsubishi Motors, and to support the strategic alliance. The transaction is subject to the signing of a definitive Alliance Agreement, expected by the end of May 2016, the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC and regulatory approvals. It is expected to close by the end of the year. The decision by Nissan to acquire a strategic stake in MMC marks the latest expansion of its Alliance model, built around a 17-year cross shareholding arrangement with Renault. Nissan has also acquired stakes or signed partnerships with other automotive groups including Daimler, and AvtoVaz. On closing, MMC will propose Nissan nominees as board directors in proportion to Nissan’s voting rights, including a Nissan nominee to become Chairman of the Board. View full article
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In under 24 hours, the rumor has become reality. Nissan will acquire 34 percent of Mitsubishi Motors for 237 billion yen (about $2.17 billion). This makes Nissan the single-largest shareholder in the automaker. Speaking at a press briefing announcing the deal, Nissan CEO Carlos Ghosn said this alliance will cover purchasing, common platforms, joint manufacturing, technology development, and target shared cost savings. The alliance will also contribute management expertise to help Mitsubishi regain public trust. “It represents a win-win. We believe in the potential of Mitsubishi Motors,” said Ghosn. In statements from the two companies, an agreement will be signed by May 25th where Nissan can name four directors to the Mitsubishi Motors board. Nissan can also name one of their directors as a chairman for Mitsubishi. Osamu Masuko, chairman of Mitsubishi Motors explained the two companies have been discussing ways to extend their partnership for some time. Mitsubishi and Nissan currently have a deal concerning minicars. When the scandal came to light, the talks accelerated. “We had to do something quite daring. It is not an easy task to restore trust,” said Masuko. Makuko also notes that a takeover like this would have happened sooner or later due to Mitsubishi lacking the resources to compete effectively on its own. “This would have happened one day,” he said. This deal does open Nissan to possible issues concerning the problems facing Mitsubishi and how much money will need to be spent. Ghosn explained that Mitsubishi was very open about the scale of problems it faces and that Nissan would only complete the deal after it has done an investigation into the investment. Source: Automotive News (Subscription Required), New York Times, Mitsubishi, Nissan Press Release is on Page 2 Nissan and Mitsubishi Motors forge strategic alliance; Nissan to take 34% stake in Mitsubishi Motors for 237 billion yen YOKOHAMA and TOKYO, Japan – Nissan Motor Co., Ltd., (“Nissan”), and Mitsubishi Motors Corporation, (“MMC”) announced that they have signed a Basic Agreement today to form a far-reaching strategic alliance between the two Japanese automakers. Following an MMC share issue, Nissan will take a 34 percent equity stake in MMC for 237 billion yen. The strategic alliance will extend an existing partnership between Nissan and MMC, under which the two companies have jointly collaborated for the past five years. Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets. Carlos Ghosn, chief executive and president of Nissan, said: “This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects. We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family.” Osamu Masuko, chairman of the board and chief executive of MMC, said: “Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximizing the benefits from alliance partnerships. This agreement will create long-term value needed for our two companies to progress towards the future. We will achieve long term value through deepening our strategic partnership including sharing resources such as development, as well as joint procurement.” Under the terms of the transaction, Nissan will purchase 506.6 million newly issued MMC shares at a price of 468.52 yen per share. The price per share reflects the volume weighted average price over the period between April 21, 2016 and including May 11, 2016. Nissan will become the largest shareholder of MMC on closing. MMC and Nissan expect Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo – Mitsubishi UFJ to maintain a significant collective ownership stake in Mitsubishi Motors, and to support the strategic alliance. The transaction is subject to the signing of a definitive Alliance Agreement, expected by the end of May 2016, the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC and regulatory approvals. It is expected to close by the end of the year. The decision by Nissan to acquire a strategic stake in MMC marks the latest expansion of its Alliance model, built around a 17-year cross shareholding arrangement with Renault. Nissan has also acquired stakes or signed partnerships with other automotive groups including Daimler, and AvtoVaz. On closing, MMC will propose Nissan nominees as board directors in proportion to Nissan’s voting rights, including a Nissan nominee to become Chairman of the Board.
