Image: Ford CEO Alan Mulally and Mexico's President Felipe Calderon
Gregory Bull  /  AP
Ford CEO Alan Mulally, left, shakes hands with Mexico's President Felipe Calderon during a news conference in Mexico City on Friday.
updated 5/30/2008 4:46:13 PM ET 2008-05-30T20:46:13

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.

Ford has sold 12 million Fiestas since the vehicle was introduced in 1976. Although it's a familiar name to customers in Europe, Asia and South America, the Fiesta was only sold in the U.S. from 1978 to 1980.

Ford also said Friday that it plans a new diesel engine line at its at Chihuahua Engine Plant and a new joint venture transmission plant with Getrag in Guanajuato.

The Cuautitlan plant now makes trucks for the Mexican market, ranging from the Ford F-150 pickup to the F-550. The company plans to import trucks from the U.S. in the future to free factory capacity for the new small cars, it said in a statement.

Overall, Ford and its parts suppliers will invest $3 billion in Mexico as part of the Fiesta project, Ford said. About 4,500 Ford jobs should be created at the plants, the company said.

"Ford is absolutely committed to leveraging our global assets to accelerate the shift to more fuel-efficient small cars and powertrain technologies that people really want and value," Ford President and CEO Alan Mulally said in a statement.

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