DETROIT-Acting on investment plans that have become a lightning rod for controversy in this year's presidential campaign, Ford on Wednesday announced it will shift all North American small-car production from the U.S. to Mexico.
"Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States," Ford CEO Mark Fields said.
Ford isn't the first automaker to make such a move. Mexico has become a mecca for new automotive industry investment and has surpassed Canada in annual automotive production.
Still, the news sparked a fresh round of criticism from Republican presidential candidate Donald Trump, who was campaigning in Flint.
"We shouldn't allow it to happen. They'll make their cars, they'll employ thousands of people not from this country and they'll sell their car across the border," Trump said. "When we send our jobs out of Michigan, we're also sending our tax base."
Fiat Chrysler, discontinuing production of the Dodge Dart in Belvidere, Ill., and the Chrysler 200 in Sterling Heights, Mich., plans to stop producing cars in the U.S. by year's end.
The auto industry has known for decades that domestic manufacturers struggle to make a profit on small cars.
In recent years, automakers including General Motors, Honda, Hyundai, Nissan, Mazda, Toyota and Volkswagen have all announced plans to either expand existing plants or build new ones in Mexico. Fiat Chrysler also has said it is considering an expansion of its production there.
Mexico has seen a 40 percent increase in auto jobs since 2008, while the U.S. has seen a 15 percent increase in the same period, according to the Center for Automotive Research in Ann Arbor.
While the North American Free Trade Agreement has been a factor driving automotive investment in Mexico, other factors have played a role as well. Mexico has trade agreements with 44 other countries, a robust rail and shipping infrastructure, lower wages than the U.S. and workforce that has proven it can make high-quality cars.
Shifting assembly to Mexico can reduce costs to a point. But some small cars are simply over-engineered, experts have said.
For example, Fields said the current Ford Focus can be ordered in 300 different configurations of options and colors. Ford wants to reduce that number to 30, which will make the production process simpler and less expensive.
Americans increasingly prefer larger vehicles, especially pickups and higher-riding SUVs and crossover vehicles for their personal use.
Ford's announcement didn't come as much of a surprise. Ford said in April it would invest $1.6 billion to build a small-car plant in Mexico, creating 2,800 jobs. Ford also said in 2015 that it planned to move production of its Ford Focus and C-Max hybrids from a plant in the Detroit suburb of Wayne to another country by 2018.
It's an ironic twist for the aging Wayne plant, where Ford spent $550 million in 2010 to convert it from a big SUV factory to one that could build the efficient Focus compact car.
The impact of Wednesday's announcement on Ford's U.S. employment will be minimal in the near-term. Ford already builds the Fiesta subcompact and the Fusion mid-size sedan in Mexico. There is an expectation that Ford will build a new Ranger mid-size pickup truck in Wayne and possibly a new Bronco compact sport-utility.
The automaker also still will make the Ford Mustang at its plant in Flat Rock, Mich., and will begin making the full-size Lincoln Continental there later this year. It also makes the full-size Ford Taurus in Chicago.
Still, Ford is reassessing much of its business to prepare for a future where it needs to make cars for new modes of transport, to generate money from shared use, all without jeopardizing profits still generated by many of its cars and trucks.
United Auto Workers union President Dennis Williams also has repeatedly blasted Ford and other automakers for investing so much money in Mexico.
"There is no reason, mathematically, to go ahead and run to countries like Mexico, Thailand and Taiwan," Williams said earlier this year. "We all recognize there is a huge problem in Mexico. So we have to address it as a nation. The UAW cannot do it alone. We are not naive."
Unifor, the Canadian autoworkers union, is also struggling. It is currently negotiating with the Detroit Three on a contract that expires on Monday and is worried that three plants could close in the coming years if automakers refuse to commit to new investments.
Ford has said it continues to invest heavily in its U.S. plants and isn't cutting jobs here. Last fall, the automaker made a commitment to invest $9 billion in U.S. plants and create or retain more than 8,500 jobs as part of a new four-year contract with the UAW. Of that, $4.8 billion is going to 11 facilities in Michigan
The future of smaller cars in the U.S. may depend on the ability to electrify their powertrains and introduce them to ride-sharing fleets where they can generate revenue from fares paid by multiple riders.
Along those lines, Fields and other Ford executives on Wednesday outlined an aggressive $4.5 billion investment plan that will unfold over the next four years. The investment will result in new models in segments such as commercial vehicles, trucks, SUVs and performance vehicles, the execs said.
Ford also reiterated its commitment to developing an autonomous vehicle by 2021. The company believes that autonomous vehicles could account for up to 20 percent of vehicle sales by 2030.
The day's announcements came as Ford gave a presentation on corporate strategy to more than 100 analysts and investors. The meeting came as the U.S. auto industry's six-year recovery is cooling and the United Kingdom's exit from the European Union has presented a new challenge to Ford's rebound in Europe.
Investors didn't reward Ford or other U.S. automakers when they posted record profits last year and early this year. Now that U.S. sales are leveling off Wall Street is even less enthusiastic about the sector. Ford shares have fallen 12 percent from the beginning of the year from $14.09 to Wednesday's closing price of $12.14.
Fields spent the first half of his 45-minute presentation assuring analysts that Ford's core business remains strong, especially in its most profitable segments such as full-size pickup trucks, commercial vans and its resurgent Lincoln luxury brand.
But he also said the company must respond to a global shift away from personal vehicle ownership to one in which personal ownership will be challenged by on-demand shared mobility.
"This is very different thinking for us," Fields said. "For most of our history we have thought about the thing and how many of the things we have sold."
In exploring how a traditional manufacturer can profit in a market where the vehicle becomes a service platform, Fields said the first question he and fellow executives had to define is, "What's our point of view on autonomy?"
"We see huge social economic and environmental benefits. We're focused on usage where miles traveled are as important as the number of units sold," he said. "Autonomous vehicles will account for one of every 10 miles traveled by 2030, and will grow from 5 percent of all vehicles sold in U.S. in 2025 to 20 percent in 2030."