Ford to Build Thai Auto Plant in Response to Asian Demand

Ford Motor Company will invest millions of dollars in two massive export hubs in Africa and Asia in an effort to strengthen its presence in rapidly growing emerging auto markets.

Today, Ford announced that it will pour $450 million into a new passenger-vehicle auto factory in Thailand. The factory should be a shot in the arm for Thailand’s auto industry and assist an economy stymied by months of political unrest.

Next week, Ford will announce plans to ramp up production capacity at a South-African plant, allowing the automaker to export additional Ford Ranger pick-up trucks to Europe and other car markets. Ford has no intention to import the international version of the best-selling truck to the United States, according to a Ford executive.

“Frankly we’re maxed out. We have more sales potential than we can build,” said Joe Hinrichs, the president of Ford for Africa and the Asian Pacific, about Ranger production. “The next generation Ranger will be also built in South Africa and will be a great opportunity for us to expand our capacity for Ranger globally.”

The new investments come on the heels of Ford’s healthy first-quarter earnings, when it showed a net income of $2 billion. In spite of its robust bottom line, the carmaker still faces obstacles, including lackadaisical demand in the European and American markets and $31.3 billion in debt.

Poised to Strike in Asian Market

Ford is viewed as a Johnny-come-lately in the Asian market, particularly in China, which is now the largest auto sales market in the world. Over the last year, though, Ford built a new small-vehicle plant in India that allowed it to double its production capacity in the country, as well as a new assembly factory in China for the Ford Focus, all in an attempt to keep pace with Volkswagen and General Motors.

“Ford is literally making up for lost time in Asia Pacific," explained Michael Robinet, an auto analyst for IHS Automotive. He believed Ford's goal to build vehicles in a single central country and export those cars and trucks to nearby markets may save the carmaker money due to economies of scale, but also exposes the company to the dangers of currency fluctuations.

Ford is also aiming to blaze an independent trail apart from Mazda Motor Corporation, formerly a close partner of Ford’s, according to Robinet. In the last few years, Ford has decreased its share in Mazda to 11 percent from a controlling interest of 33 percent. The automaker is also trying to dissolve its three-way partnership with the Changan Automotive Group and Mazda in China, according to sources close to the matter. Instead, the company hopes that the Chinese carmaker will partner one on one with Ford and Mazda.