Ford Adding $400 Million, New Model in Missouri Plant

Ford Motor Co. plans to invest $400 million and build a new model at its factory in Claycomo, Missouri, after moving production of the Escape small sport- utility vehicle to another state.

All 3,750 hourly workers at the plant will be retained, Marcey Evans, a Ford spokeswoman, said today in an interview. Missouri lawmakers met in special session last year to grant Ford tax breaks after the company said it would begin manufacturing the Escape at a Kentucky factory this year.

Ford may build the full-size Transit van, now sold in Europe, on a new assembly line at the plant near Kansas City, Missouri, said Michael Robinet, a consultant with IHS Automotive in Northville, Michigan. Evans wouldn’t confirm the new model. The plant will continue to build Ford’s F-150 pickup, she said.

“Bringing the Transit to Kansas City gives Ford more flexibility to meet new fuel-economy and emissions standards with a more efficient, light commercial vehicle,” Robinet said in an interview. “The Transit has been a star of Ford’s fleet in Europe for years. The new Transit was designed for global markets.”

Ford will continue to offer its Econoline full-size commercial van in the U.S., in addition to the Transit and the compact Transit Connect van, Robinet said. Econoline sales are likely to decline substantially as Ford introduces the full- sized Transit to U.S. commercial buyers, he said.

Ford rose 5 cents to $18.70 at 4 p.m. in New York Stock Exchange composite trading. The Dearborn, Michigan-based company’s shares climbed 68 percent last year.

Tax Incentives

The automaker is to receive as much as $100 million in tax incentives from Missouri, according to Sam Murphy, a spokesman for Governor Jay Nixon, a Democrat. The specific size of the incentives will depend on how many workers are retained and how much they are paid, he said.

“This plant could have been lost,” Nixon said in an interview. “I just was not going to let that happen. We have a very direct and strong relationship with Ford, and these incentives are tailored very specifically so Missouri taxpayers are protected.”

The factory, which opened in 1951, will cease building the Escape later this year or early in 2012, when production of that model begins at Ford’s plant in Louisville, Kentucky, Evans said. The automaker may spend a year overhauling the Claycomo factory and begin producing the Transit in early 2013, Robinet said.

New Body Shop

“We’re making a $400 million investment in the plant, primarily to build a new body shop and for equipment and tooling in final assembly,” Evans said. “We’re also committing to retain the current level of jobs at 3,750, which is our second- largest plant.”

The United Auto Workers said it worked with Ford and Missouri to save the Claycomo plant.

“The commitment and hard work of UAW members has contributed greatly to the success of this plant,” UAW Director Jim Wells said in a statement. “We look forward to many more years here in Kansas City.”

Ford is gearing up to more fully use its factories amid an economic recovery in the U.S., said Jeff Schuster, executive director of global forecasting for J.D. Power & Associates in Troy, Michigan. Last year, Ford’s U.S. factories ran at 67 percent of capacity, up from 59 percent in 2009, Schuster said.

Flexible Capacity

“Ford has been running on strong momentum for the last year and a half, and if they continue at this pace, they’ll certainly have capacity constraints,” Schuster said. “The idea here is to have as much flexible capacity as they can so they’re able to adapt to changes in consumer tastes.”

Ford, the only major U.S. automaker to avoid bankruptcy in 2009, earned $6.37 billion in the first nine months of 2010, its largest profit since 1998 and the most of any global automaker. General Motors Co. and Chrysler Group LLC each are partially owned by the U.S. government after undergoing reorganization.

“The fact that Ford did not avail itself of those resources has made it a stronger company that is able to make these kinds of investments,” Nixon said.

To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net. To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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