Ford Motor Co. has canceled plans to move production of the European Kuga model from Saarlouis, Germany to Louisville, Kentucky, as was originally planned last year. The move was planned in order to take advantage of lower labor rates and a weaker dollar, but the falling value of the Euro has made that plan null and void. The reversal demonstrates the challenge faced by Ford of lowering U.S. labor costs to be globally competitive.
Ford”s relocation plan started to come undone last November when the UAW refused certain concessions to Ford that it granted GM and Chrysler, namely a six-year wage freeze for new hires, and a ban on certain strikes until 2015.
“We are on track to begin production next year of a new vehicle from our global C-car platform at the Louisville assembly plant,” Mark Truby, a Ford spokesman, said in an interview. “Though we are not providing product details, we intend to fully utilize capacity at the transformed facility.”
A year ago, when Ford originally intended the move, workers in Germany were getting $62 USD per hour, compared to $50 in the states. Now, after the declining value of the Euro, it works out to be about the same either way.
– By: Stephen Calogera
Source: Automotive News