Ford to invest $3bln in Mexico Car Plant

Ford Motor Co. announced on Friday that it will bring up a new car plant in Mexico, with an investment of $3 billion, the biggest in country’s manufacturing sector. The company will start building its Fiesta subcompact at the Cuautitlán Assembly Plant.

Fiesta, Ford's new global small car, will be sold as a sedan and a hatchback starting in Europe this fall. The Dearborn automaker has lost more than $15 billion over the past two years and says the new facility will be critical for its future.

"Ford is absolutely committed to leveraging our global assets to accelerate the shift to more fuel-efficient small cars and powertrain technologies that people really want and value," said CEO Alan Mulally. "Our investments in these facilities in Mexico are part of our plan to further realign our manufacturing capacity in line with the introduction of more small cars and crossovers."

Lower labor costs in Mexico is being cited as a major reason for Ford’s decision. Car workers in America, however, will be displeased with the news as they were expecting the plant to be built in United States.

The new factory and other changes in Ford's Mexican operations are likely to create an estimated 4,500 jobs in the country.

Mexican President Felipe Calderon hailed the announcement as a "turning point" for his country. "We want Mexico to be an automotive country, one that is competitive and with the most advantages so that the worldwide automotive industry will establish itself here," he said.

Rising fuel prices are driving people away from trucks and Sports Utility Vehicles. With more and more people switching to smaller, more fuel-efficient cars, automakers around the world are gearing up to meet the demand.

Ford also plans to move one of its factories from large truck to small car production, and open a new diesel engine line at another plant, in Mexico.