Ford cancels $1.6B Mexican plant, Trump takes aim at General Motors

Ford Motor Co. says it is dropping its plan to build a $1.6-billion US plant in Mexico, a plan criticized by Donald Trump during last year's presidential primary campaign.

Ford also announced it plans to invest about $700 millionin a Michigan factory that will build high-techautonomousand electric vehicles.

The company said it will add 700 direct new jobs at itsFlatRock (Michigan) Assembly Plant, which will build a small sportutility vehicle with extended battery range, afully autonomous vehicle for ride-hailing or ride-sharing, and the Ford Mustang and Lincoln Continental.

In April, Ford revealedplans to build theplant in Mexico's San LuisPotosistate, with the goal of creatingabout 2,800 jobs and shiftingsmall-car production out of the U.S.

Trump, who had criticized movingjobs from the U.S. to Mexico, calledFord's decision "an absolute disgrace." Trump also pledgedhe would rewrite the 1994 North American Free Trade Agreement (NAFTA), tax imports and punish U.S. companies, including Ford.

Taxes, regulations

Ford chief executive Mark Fields said Tuesday the decision to cancel the Mexican plant was partly related to a need to "fully utilize capacity at existing facilities" as sales ofsmall and medium-sized cars slide.

Speaking at the company's plant in FlatRock, Mich., Fields spoke about Trump's vow to boost U.S. competitiveness by cutting taxes and easing regulations.

"This is a vote of confidence for president-elect Trump and some of the policies he may be pursuing," Fields said.

Additionally, Ford reiterated Tuesday that it wouldcontinue with its plan to build its newFocus small car at an existing plant in Hermosillo, Mexico, in order to boost company profitability.

Just a week after the U.S. presidential election in November that led to Trump's victory, Fieldsconfirmed the company was pressing on with the planfor the Focus.

• Ford shifting small car production to Mexico: CEO

Citing an unnamed source, Reuters reported that theTrump team was toldTuesday morning about Ford's new plans. The news agency reported the source said the move was influenced by Trump's policy goals, but said there were no talks between the company and Trump about the decision to nix the Mexico plant or pump money into Michigan.

Following the company's announcement, Ford shares rose more than three per cent, closing at $12.59US.

Trump tariffthreat

In related auto-sector news, Trump also lobbed a volley on Twitter at General Motors and threatened a "big border tax" for producing Chevrolet Cruze vehicles in Mexico.

"General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!" Trump tweeted.

In defence, GM said all Chevrolet Cruze sedans sold in the U.S. are built in its assembly plant in Lordstown, Ohio.

The company sold approximately 190,000 Cruze vehicles in the U.S. last year, with about 185,000 of them the U.S.-made sedan. Only about 4,500 were the hatchback version built in Mexico.

"GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S," the automaker said in a statement on its website.

GM shares rose by 31 cents to end at$35 US.

So far, Trump has mainly focused on U.S. automakers and their Mexican production.The incoming U.S. leader hasn't really gone after the Canadian automotive industry, saidBrendanSweeney,project manager atMcMasterUniversity's Automotive Policy Research Centre.

Given how integrated the Canadian and U.S. auto sectors are, with parts and vehicles flowing across the border., perhaps Canadaisn't a target, Sweeney said.

"If Trump were to impose a tariff on Canadian-made vehicles coming into the U.S., itwould hit the U.S. consumer pretty hard," he told CBC News.