Ford Set to Cancel Domestic Production of Small SUV for Export

Changing currency advantage scuttles plan for Kentucky assembly plant

Ford Motor Co. will not be manufacturing a small SUV at its Louisville, Ky., assembly plant as previously announced, according to new reports. The reversal is based on unfavorable currency exchange rates, which will undo the advantage of producing the Ford Kuga in the U.S. for export to Europe.

Ford had planned to relocate the sport-utility vehicle line to Louisville from Saarlouis, Germany, next year, to take advantage of lower U.S. labor costs and a weaker U.S. currency. Now, the dollar has stabilized relative to the declining Euro, eliminating much of Ford’s planned advantage.

The issue of labor costs at the Kentucky plant reportedly remains unclear as the automaker and the United Autoworkers union approach new contact negotiations in 2011. Ford and the UAW had reached a tentative deal last year concerning Kuga production in Louisville.

The Ford Kuga is a compact crossover SUV, with front-wheel drive and four-wheel drive options and a choice of 2.5-litre gas or 2.0-liter diesel engine. It is designed and built by Ford and mounted on the same platform that supports its Ford Focus and Ford C-MAX models.

Ford had planned build and export up to 80,000 Kugas annually, according to sources at the automakers. The Louisville plant also produces the Ford Escape, a comparable model for the domestic market. The plant is due to lose its production of the Ford Explorer, which is being moved to a Chicago plant in 2011.

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