MEXICO CITY (Reuters) - Ford Motor Co said on Friday it will spend $2.5 billion to build a new generation of fuel-efficient engines and transmissions in Mexico, creating 3,800 jobs.
The United Auto Workers union, in response, said putting jobs in Mexico rather than the United States will be a major issue at its upcoming U.S. labor talks with Ford, General Motors Co and Fiat Chrysler Automobiles.
The UAW president, Dennis Williams, said Ford’s announcement is “disappointing, but not any more disappointing than GM’s decision to invest $5 billion in Mexico,” or those made by all six of the top-selling automakers in the U.S. market.
The companies are drawn to Mexico for its proximity to the lucrative U.S. market as well as lower worker pay than at U.S. plants.
The draw of Mexico complicates the UAW’s effort to raise worker pay and keep jobs at U.S. plants.
Ford said its investment, made in its 90th year in Mexico, is a way to keep the company competitive with other global automakers.
Ford said it will build a new engine facility within its engine plant in the northern state of Chihuahua. The facility will build a new gasoline engine that will be exported to the United States, Canada, South America and the Asia-Pacific region.
Production of Ford’s I-4 and diesel engines at the Chihuahua plant will also be expanded, making it the biggest engine plant in Mexico.
The company said it will also build a transmission plant in the central state of Guanajuato, in partnership with German transmission maker Getrag.
Ford’s announcement, confirming an earlier Reuters report, is the latest in a recent series of auto investments in Mexico.
Earlier this week, Toyota Motor Corp announced it would spend $1 billion for its first passenger car plant in Mexico, and last month, Volkswagen said it would invest $1 billion to expand its plant in Mexico’s Puebla state.
Reporting by Luis Rojas in Mexico City; Additional reporting by Bernie Woodall in Detroit; Editing by Peter Galloway and Leslie Adler