No surprise in seeing Ford build new plant in Mexico, expert says

The decision from Ford Motor Co. to build a new assembly plant in Mexico is another step in automakers shifting production from high to low-cost jurisdictions, a University of Windsor professor says.

The company announced Tuesday the new $1.6-billion facility will be used primarily to produce small cars beginning in 2018.

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Tony Faria, the co-director of the Office of Automotive and Vehicle Research at the University of Windsor, said that isn't an unexpected development.

With workers in Mexico making about one-fifth the compensationof their counterparts in the United States and Canada, wages are a major factor when automotive companies decide where to invest their money, Fariasaid.

"We have to recognize that as a basic fact and think about what we need to do to be competitive in wage rates rather than continuously shuffling it off," he said.

Moving south

Auto and other manufacturing jobs having been moving south for years.

Mexican auto production more than doubled in the past decade, and the consulting firm IHS Automotive expects it to rise another 50 per cent to just under five million vehicles by 2022.

U.S. production is expected to increase only three per cent, to 12.2 million vehicles, in the next 7 years and the Conference Board of Canada expects Canadian production levels to flatlineover the next five years.

Faria said it's not about cutting wages, but instead coming up with creative contracts that allow autoworkers to be paid fairly.

"I'm not calling for wage rates to come down in any fashion," Faria said. "I'm talking about the unions engaging in creative labour contracts that help out the companies. We want to keep jobs here, not see those jobs move away."

Unions representing workers at Ford and Fiat Chrysler Automobiles will be entering into contract negotiations with those companies later this year.

Chamber calls for auto strategy

For Matt Marchand, the president and CEO of the Windsor-Essex Regional Chamber of Commerce, Ford's decision is proof Canada needs a national automotive strategy.

Thechamber has long advocated for such a strategy to help reverse the shift of auto production moving away from Canada.

"We have been declining both relatively and absolutely over the past 15 to 20 years," he said.

"[Automotives are]the most valuable export [and] the most valuable industry in the world and it's been declining absolutely and relatively," he said.

The UAW's new four-year contract with Ford, signed last year, guarantees new vehicles for its Wayne, Mich., assembly plant in 2018 and 2020 and a $700-million investment that preserves the plant's 3,924 jobs.

In a statement, the union representing Ford workers in Windsor said it's frustrated by continued investment in Mexico.

Chris Taylor, the president of Unifor Local 200,previously told CBC News the union won't sign a new agreement with Ford unless there is a similar investment in Windsor.

Ford also assembles the Ford Flex, Edge and two Lincoln models at its plant inOakville, Ont., and builds V-8 engines in Windsor.