Ford to Manufacture European Cars in America

The Wall Street Journal is reporting that Ford will retool its U.S. factories to manufacture European cars for the domestic market. Ford believes the smaller more fuel efficient cars it sells in Europe, such as the Mondeo pictured above, will do well under the current economic conditions in the United States. Europe has been a bright spot for Ford, its main European markets rose 2% in the year's first half while its U.S. sales dropped 14% in the same period. From the WSJ article:

By making its European models in U.S. plants, Ford can avoid the foreign-exchange impact and sell the vehicles at more attractive prices.

The move was pushed by Chief Executive Alan Mulally and met resistance from others in the company, people familiar with the matter said. Opponents questioned whether Ford can meet the timetable for the effort -- possibly as soon as 18 months -- and worried it could ultimately fail, as did previous efforts by Ford to sell European models in the U.S., these people said.

But Mr. Mulally, who spent his career at Boeing Co. before taking over the second-largest U.S. auto maker in 2006, decided to push ahead, they said.

I think this is a no-brainer for Ford. However, I wonder why they don't manufacture in the U.S. for the European market? With the lower cost of employment and favorable exchange rate you would think that exporting from the U.S. to Europe would work well. It seems to work for BMW, as I reported previously. If Ford doesn't export cars from America to Europe, my guess is that it is because the labor unions in the U.S. make it uncompetitive. BMW makes it work but those are newer and undoubtedly nonunion factories that it uses.