WHY RETOOLING THE WAYNE TRUCK PLANT MAKES SENSE

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For the last couple of days, the Ford world has been a-twitter with Ford Motor Company's (F) announcement of its committment to build the next generation Focus and an some sort of electric-golf-cart-phone-booth-city car right here in the U.S.A. With $500,000,000.00 pledged to retool truck plants for the purpose, both the stock market and appliance motoring auto journalists have been cooing FoMoCo's praises.

Still, history suggests that building small cars in U.A.W.-controlled plants is a money-loser. FoMoCo boss Alan Mulally says that its different this time.

But even if it's not, it still makes sense.

Why?

Undoubtedly the new Wayne plant tooling and line will be flexible, so that FoMoCo can dump the electric toy cars on short notice.

On the other hand, building small cars in America is one of Ford's few potential strategic advantages. Even if the next-gen Focus is not profitable under the UAW-Obama-Radical Green captivity of Ford's microeconomics, it is necessary because of the "two fleets" rule to offset the sorts of larger and high-performance vehicles consumers really want and need.

It is also good business as an active counter to the backlash against perceptions of a predatory Asian invasion of the U.S. auto market (As quality American jobs become more scarce and unstable, it is inevitable that some consumers will turn more "nationalistic" in their durable goods purchases out of a feeling that we're losing too many "good" jobs overseas. Purchase of an "all-American" vehicle instead of an import or "invader"/transplant will seem to many as a symbolic show of support for the American economy and America's industrial future)

Moreover, as the economy shrinks under the weight of Obamanomics ("Cap and trade," "card check" unionization, huge deficits, stagflation, punitive taxation and regulation of small businesses and entrepreneurs, expansion of government entitlements, etc.) Ford will be forced to increase its marketshare in smaller vehicles.

It's also a necessary hedge for opposing unreasonable regulatory adjustments of the Corporate Average Fuel Economy standards. Pressure from the courts, California, and Obama's environmental constituents will be to jack fuel economy averages to as much as 40 m.p.g. or more! Ford has to at least try to build and sell small cars in the U.S.A. before it can credibly argue future regulatory increases in these standards are wildly unrealistic (which they are). Increasing the U.A.W.'s stake in this debate is brilliant.

Finally, it fits with the "touchy-feely" corporate narrative that FoMoCo is pushing at the present time. (See the Ford Story website link on the sidebar) While most of the profits may still come from the working (e.g. SUVs/trucks) and fun (high performance/sporty) sides of the business, Ford needs a strong smokescreen of "Good Green Global Citizen" claptrap to placate politicians, activist shareholders, special interest groups, and certain members of the Ford family.