Production of Ford Motor Co.'s small sport-utility vehicle will be transferred from Europe to the US to take advantage of lower labor costs and the weaker dollar, according to insiders.
The unconfirmed reports say that the Kuga model will be shifted in October 2011 to Louisville, Kentucky, from a factory in Saarlouis, Germany.
The insider said that about 80,000 units a year will be exported to Europe. This year, the dollar has dropped 18 percent against the euro, lowering the cost of U.S.-made goods.
According to Barclays Capital auto analyst Brian Johnson, this plan is sensible because western Europe is "not a particularly cheap place to make cars."
He estimates Ford's labor costs in the U.S. could be $10 an hour lower than in Germany. He explained further that to build a car with European specifications on a U.S. assembly line also shows the benefits of having common vehicle platforms.
In line with its aim to be profitable by 2011, Ford is asking the United Auto Workers union to approve a second round of concessions this year to lower its labor costs similar to Toyota Motor Corp.'s US plants.
The new models for the Louisville factory, which will also make the Escape small SUV, are part of the automaker's Oct. 13 tentative agreement with the union. Mark Truby, a spokesman for Ford, said that the company isn't ready yet to announce which models will be sourced.