Ford to build cars for U.S. in Mexico City

Ford Motor Co. plans to build its new Fiesta subcompact at a factory near Mexico City for sale in the U.S., the company said Friday.

Ford plans to retool its Cuautitlan Assembly Plant from large-truck to small-car production as it moves to shift its factories from trucks toward more fuel-efficient vehicles, the company said.

The move is a blow to the United Auto Workers union, which last year approved a contract that granted concessions to the automaker. Earlier this year, UAW President Ron Gettelfinger said the union would try to convince Ford that its U.S. plants were competitive enough that the automaker could make money building its smallest cars in the U.S. Currently, all subcompacts sold in the U.S. are built overseas, he said.

Messages seeking comment were left with UAW spokesman Roger Kerson.

The Fiesta is critical to Ford's effort to unify its global operations and sell versions of the same vehicle in markets worldwide. Three- and five-door hatchback versions will go on sale in Europe this fall and China by the end of the year. Other versions, including a four-door sedan, will reach the rest of Asia by 2009. North America will get a four-door version as well as the European hatchback in 2010.

Also Friday, billionaire Kirk Kerkorian will stick with plans to buy more Ford stock after the shares fell 21 percent below his offer, showing support for chief executive Alan Mulally's turnaround strategy.

Kerkorian's Tracinda Corp. is waiving a provision in his May 9 tender offer that allowed him to withdraw the plan if the shares fell more than 10 percent from the day before the filing, Tracinda said. The $8.50-a-share proposal is set to expire June 9.

The 90-year-old investor continues to back Mulally's efforts to pare labor costs and expand its lineup of more efficient cars even after Ford abandoned its goal of a 2009 profit last week. Mulally said Ford will shift from trucks and speed development of fuel-saving vehicles as U.S. buyers struggle with gasoline at $4 a gallon.

“Ford has products in the pipeline that will help them tremendously and their biggest enemy is time, more so than the economy,” said Jim Hall, principal of 2953 Analytics, an automotive consulting firm in Birmingham, Mich. “This is a product war.” Bloomberg News contributed.