Ford to Spend C$700 Million to Upgrade Ontario Factory

Ford Motor Co. (F), the top-selling automaker in Canada, said it will spend C$700 million ($685 million) to update its last assembly plant in the country to build cars and trucks from one of its global vehicle platforms.

The Oakville, Ontario, complex will get an upgrade to its body shop and transition from a to-be-discontinued architecture now underlying the Ford Edge and Lincoln MKX crossovers produced there, said Joe Hinrichs, Ford’s president of the Americas. He declined to name the future platform or models that the Dearborn, Michigan-based company will build in the factory.

Carmakers are paring the number of architectures off which they build vehicles to trim development costs and boost profit. The nine global platforms that Chief Executive Officer Alan Mulally has focused on under his One Ford plan are used for 85 percent of the vehicles Ford builds. The carmaker had 27 vehicle architectures in 2007.

“This secures the foreseeable future of the Oakville assembly complex, and that’s a big deal for auto manufacturing in Canada,” Hinrichs said by telephone.

The investment will maintain 2,800 jobs at Oakville, Ford said today in a statement. The project will be completed in the second half of 2014 without any major interruption to vehicle production at Oakville, Hinrichs said. The factory also assembles Lincoln MKT and Ford Flex utilities.

“We may take a down week here or there tied to a holiday period to extend some of the construction periods, but nothing of any major consequence,” he said. “We’re running this plant pretty solidly. We need to keep building product.”

Harper Investment

Prime Minister Stephen Harper’s government will contribute as much as C$71.6 million to the the Oakville project, according to a statement. The contribution will be made through a C$250 million Automotive Innovation Fund his administration introduced in January to preserve the company’s manufacturing base and blunt the impact of a strengthening Canadian dollar.

Ford in 2011 closed its St. Thomas, Ontario, factory that made the now-discontinued Ford Crown Victoria and Lincoln Town Car sedans. The automaker last year agreed to create about 600 jobs in Canada, including a partial third shift at Oakville, in negotiations with the Canadian Auto Workers union.

“It’s still a high-cost labor environment, given where the Canadian dollar is,” Hinrichs said. “But with the scale we get and support we get both from the government and from the union, we’re able to make a strong business case.”

Export Markets

The Oakville factory exports to more than 80 markets globally, with Edges being sent to countries including China and Brazil, Hinrichs said. Ford will continue to ship vehicles outside North America from the plant, he said.

Ford’s share of the U.S. market rose to 16 percent this year through August from 15.6 percent a year earlier, leading gains among major automakers.

Ford rose 0.2 percent to $17.66 at the close in New York. The shares have climbed 36 percent this year, outpacing the 21 percent gain for the Standard & Poor’s 500 Index.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net; Gerrit De Vynck in Oakville, Ontario at gdevynck@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Jacqueline Thorpe at jthorpe23@bloomberg.net

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