Wednesday, October 10, 2007

Ford to Build Car Plant in Thailand

BANGKOK, Oct. 9 — As it proceeds with plans to cut jobs and close factories in North America, the Ford Motor Company is expanding aggressively in Asia, announcing a $500 million investment Tuesday to build a car plant in Thailand just two weeks after opening a $510 million manufacturing center in Nanjing, China.

Both investments were made with Mazda, the Japanese company that Ford controls through a 33.4 percent stake — a partnership that provides Ford with both cash and manufacturing skills.

“We’re looking for profitable growth,” said John Parker, Ford’s executive vice president for Asia and Africa. “You have to put some foundations in place.”

Ford’s strategy appears to be to save money by curtailing operations in North America while making money by expanding in growth markets in Asia and elsewhere abroad.

The company announced worldwide losses of $12.7 billion last year and said it planned to idle or close 16 North American facilities by 2012, including seven vehicle assembly plants.

Its operations outside the United States provide Ford with a lifeline of liquidity, including $551 million in pretax profit in South America in 2006, $469 million in Europe and $168 million through the association with Mazda.

The company lost $185 million in Asia last year, mainly because of a collapse of sales in Taiwan and shifting tastes in Australia away from larger cars, but rebounded in the second quarter of 2007 to $26 million in profit.

The plant in Thailand will produce 100,000 small cars, with 80 percent of them to be exported to other Southeast Asian countries as well as Australia, New Zealand and South Africa. Ford has no plans to export the small passenger car, known in the industry as a B-class, to the United States, Mr. Parker said.

Exporting to the United States could antagonize the United Automobile Workers, the union facing layoffs as part of Ford’s corporate overhaul under Alan R. Mulally, the chief executive appointed in September 2006 to help turn around the carmaker. U.A.W. talks with General Motors last month led to a short strike. Chrysler is being threatened with a walkout in current talks, and Ford will be next to negotiate.

Thailand will export about 625,000 vehicles this year, 70 percent of them pickup trucks, of a total output of 1.25 million vehicles.

American pickup truck makers are shielded to an extent from foreign competition by a 25 percent tariff imposed in the 1960s, known colloquially as the chicken tax because it was initially levied in retaliation for duties imposed on American chicken exports.

The investment by Ford and Mazda helps cement Thailand’s place as the third-largest Asian car manufacturer, behind Japan and South Korea. The expansion of Ford and Mazda into small cars helps Thailand diversify beyond pickups.

Last week, the Thai board of investment approved plans by Honda to double its annual production capacity here to 240,000 cars.

Japanese carmakers, led by Toyota, have gradually shifted some of their production to Thailand over the last decade. Nissan, Mitsubishi, and Isuzu and its partner General Motors, also have major plants in the country.

“It’s a big vote of confidence for Thailand,” said Frederic Neumann, chief Thailand economist for HSBC, referring to Ford’s and Mazda’s investment.

Vallop Tiasiri, president of the Thailand Automotive Institute, a government agency that plans strategy, says Thailand will have a manufacturing capacity of two million cars in the next five years.

Thailand suffers from political uncertainty. The generals who took power just over a year ago have scheduled elections in December, but questions remain about the future political role of the military and of Thaksin Shinawatra, the exiled prime minister who retains considerable popularity among some groups..

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