Ford to Expand U.S.

Production of Trucks
and S.U.V.s
By BILL VLASICMARCH 28, 2017

President Trump met with auto industry leaders including Fords chief executive, Mark Fields,
far right, in Michigan two weeks ago. Credit Jonathan Ernst/Reuters

DETROIT President Trumps goal of stimulating growth in the American auto industry is
getting a big push from the seemingly insatiable appetite of consumers for more trucks and sport
utility vehicles.

On Tuesday, Ford Motor became the latest car company to announce major investments in its
facilities in the United States, prompting Mr. Trump to hail the move as another milestone in his
efforts to support domestic auto manufacturing.

But the decision by Ford to invest $1.2 billion in three Michigan locations is more about
Americas love affair with pickups and S.U.V.s than about economic policies put forth by the
Trump administration.
Like similar announcements made this year by General Motors and Fiat Chrysler, Fords move is
primarily driven by competitive pressures to keep pace with the surging market for new truck
and S.U.V. models.

The centerpiece of Fords investment package involves spending $850 million to upgrade its
assembly plant in Wayne, Mich., to build a new Ranger pickup and Bronco S.U.V.

The decision to add the new models was previously agreed to in Fords labor contract with the
United Automobile Workers, and was hardly a surprise given the industrys continued shift
toward larger, more utilitarian vehicles.

And although Mr. Trump basked in the news with a Twitter message that hailed car companies
coming back to U.S., Ford said the decision was prompted by the realities of the current
marketplace.

These products are well positioned for where consumers are now and where they are going,
said Joseph R. Hinrichs, president of Fords Americas division.

About three out of every five new vehicles sold in the United States are trucks and sport utility
vehicles, and their popularity has been critical to the industrys two straight years of record
overall sales.

The growth in larger models is partly because of low gasoline prices, as well as continued efforts
by automakers to broaden their product lineups to meet demand.

G.M., for example, has enjoyed success with a new line of midsize pickups that offer consumers
an attractive alternative to its larger truck models.

Fiat Chrysler, for its part, has expanded its portfolio of Jeep S.U.V.s to feature smaller models
that incorporate the rugged styling and capability that has defined the brand for years.

In Fords case, the company needed to branch out beyond its full-size pickups with a new Ranger
model that could compete with G.M.s entries in the segment. Similarly, the Bronco adds another
S.U.V. in Ford showrooms to rival the Jeep lineup.

Mr. Hinrichs said the new models were building on our strengths in the truck and S.U.V.
categories even as the investments are seen as a response to Mr. Trumps aggressive push for
more American auto jobs.

In addition to the investment in the Wayne assembly plant, Ford said Tuesday that it would spend
$150 million to add or retain 130 jobs at a Michigan engine plant, and invest $200 million on an
advanced data center to support the development of autonomous and electrified vehicles.

He said the investments were not discussed with Mr. Trump when he met with auto executives
on March 15 in the Detroit area, vowing to reduce government regulations to promote job
growth.
It wasnt part of that conversation, Mr. Hinrichs said, noting that Ford has been steadily
expanding its domestic manufacturing operations since the last recession.

We are glad to call this country our home, he said. And we are proud to be going further in
our commitment to invest in manufacturing here.

But it is difficult to deny that Mr. Trumps intense interest in the auto industry is having an effect
on the production plans of Ford, G.M. and other automakers.

During his presidential campaign, Mr. Trump repeatedly criticized Ford, for example, for its
plans to build a $1.6 billion factory to make small cars in Mexico.

After justifying the move on several occasions as a prudent investment, Ford suddenly scrapped
the Mexican plant after Mr. Trumps election. Since then, the company has shifted its focus to
expanding and upgrading several of its facilities in its home state of Michigan.

It is hardly alone. On the day of Mr. Trumps visit to Michigan, G.M. said it would create or
retain about 900 jobs in the state mostly to support manufacturing of new trucks and S.U.V.s.

This week, the Japanese automaker Honda said it would spend $85 million to improve
manufacturing flexibility at its plant in Alabama that makes S.U.V.s, pickups and minivans.

The industry could see more American investment in the months ahead if the truck and S.U.V.
market continues to expand.

And Mr. Trump could accelerate the flow of money into American plants if he follows through
with his pledge to establish a border tax on vehicles imported from Mexico and elsewhere.

With the American market poised for another big year of vehicle sales, companies are eager to
capitalize on the strong demand while it lasts even if it means stepping up investments to
increase production or introduce new models.