Ford, which plans to cease making the Econoline van later this year, will revive the Ohio factory where the vehicle is made by investing $168 million to move pickup production there from Mexico early in 2015.
Production of Ford’s commercial F-650 and F-750 medium-duty pickups will move from a plant in Escobedo, Mexico, to Avon Lake.
Ford had operated a Mexican-based joint venture with Navistar International Corp. known as the Blue Diamond Trucking Co. The automaker is cutting those ties to take full control of production, design and engineering of its top-selling F-series pickups, said Joe Hinrichs, Ford’s president of the Americas.
Ford derives most of its profit from its F-Series truck line, Morgan Stanley has said. The second-biggest U.S. automaker sold 763,402 such vehicles last year, including 8,682 medium-and heavy-duty pickups, up 18 percent from 2012. Later this year, the company will debut an aluminum-bodied F-150 pickup, to be followed early in 2015 with redesigned versions of the F-650 and F-750, still featuring steel bodies.
“This is a highly profitable vehicle,” said Kristin Dziczek, an analyst with the Center for Automotive Research in Ann Arbor, Mich. “The bigger the vehicle, the higher the profit, so that makes it less difficult that the labor costs are slightly higher in Ohio than Mexico.”
Ford also won’t have to share profits with Navistar now that it’s pulled out of that joint venture, Dziczek said.
Ford shares gained 19 percent last year, trailing the Standard & Poor’s 500 index’s 30 percent improvement.
Saving U.S. jobs
Moving the work from Mexico will preserve the jobs of 1,600 workers at the Avon Lake factory and honors an agreement Ford made with the United Auto Workers union in 2011 contract negotiations, Hinrichs said. No new jobs will be created and Ford’s labor costs will be unchanged.
The U.S. has surpassed Mexico as the preferred place to relocate manufacturing that had been moved offshore, according to an online survey of 143 senior executives conducted in January and February by consultant AlixPartners of Southfield, Mich. It was the first time in the four years of the study’s existence that the U.S. was chosen over Mexico.
In Ohio, Ford is ending production of the Econoline, also known as the E-series, to make way for the Transit Van it is bringing from Europe and will produce at its Kansas City assembly plant in Claycomo, Mo.
Ford has been building autos in Avon Lake since 1974 and that plant’s future was a key part of contract negotiations with the UAW in 2011.