Case Study # 01: Battery-Powered Rush to Build Cars in Mexico Ford recently announced plans to assemble battery-powered cars in Mexico. Over the last several years, many automobile companies have rushed to build plants in Mexico to take advantage of the low cost of labor in addition to a growing demand for cars in parts of Latin and South America. Wages in Mexico are in the range of $8-$10 per hour, as compared to $29 per hour in the United States.
Because profit margins on electric vehicles are still slim, a result of costly batteries and sales volume that hasn't reached its potential, the move to Cuautitlan, north of Mexico City will allow Ford to begin assembling a small, battery-powered sport-utility vehicle in 2020. The electric vehicle boasts a 300-mile driving range before the need for charging.
The investment is part of the company's ongoing "One Ford" global engineering structure and strategy, which emphasizes global competitiveness. "One Ford" is the company's effort to get its global operations in sync for greater efficiencies and economies of scale. In less than a decade, Ford has reduced its product platforms (examples include subcompact, compact. midsize, SUV, and truck) from 27 down to just 9.
Ford manufactures the Fiesta, Fusion, and Lincoln MKZ in Mexico. As Mexico continues to transform into a world-class manufacturing destination, foreign carmakers like Nissan, Mazda, Toyota and Volkswagen have also taken notice by investing billions of dollars into the country. As auto manufacturing continues to gain momentum in Mexico, look for more investments by global carmakers, led by "One Ford."
Case Discussion All questions must be answered:
a) Discuss your perception of Ford Motor Company, its cars, and its brand. Does the fact that many of its cars are made in Mexico and throughout the world impact your perception of Ford as an American brand? Why or why not?
b) Mexico is the fourth-largest vehicle producer, the fourth-largest engine producer, and the second-largest nation supplying Ford's global manufacturing facilities. Despite Ford's success, what challenges do you see for automobile manufacturing in Mexico?