Ford to Create 850 New Jobs in North America : Trade: Citing NAFTA, the auto maker says it will spend $200 million, mostly in Mexico.

In the first major investment by a big manufacturer in the wake of the North American Free Trade Agreement, Ford Motor Co. will spend $200 million--mostly in Mexico--to boost production, creating 850 new North American jobs, company officials said Thursday.

The bulk of the investment--$175 million--will go to modernize the antiquated Cuautitlan plant near here for use as a third production site for the company’s Mondeo world car--in this case Ford Contour and Mercury Mystique models that will be sold throughout North America.

Ford also said it expects to sell 25,000 U.S.-made cars in Mexico next year, compared to the 1,500 sold this year, prompting plans by the company to increase production at several U.S. plants.

While Ford touted its plan as evidence that both the United States and Mexico will win under NAFTA, the details--a big investment in Mexico, small job gains in both countries--suggest that both supporters and foes of the free-trade pact will be able to claim that their predictions of its impact were right.

“We have stated that the new trade agreement would benefit the economies of all three countries and our industry in particular,” said Ed Hagenlocker, executive vice president of Ford’s North American Automotive Operations. “These planned actions are a good example of these benefits.”

The Ford announcement is the first of many significant export-oriented investments that Mexico can expect as a result of NAFTA, predicted Harley Shaiken, a UC Berkeley labor and technology professor who has studied the Mexican automotive industry.

The combination of cheap labor and high technology will mean lower production costs for industry, he said. “Whether that translates into lower prices is anybody’s guess,” Shaiken said.

Officials of the United Auto Workers union, which opposed NAFTA, declined to comment on the announcement.

NAFTA--which liberalizes the rules for automotive trade among the United States, Mexico and Canada--was key to Ford’s plans.

Currently, auto makers must export $1.75 worth of fully assembled cars or trucks from Mexico for every $1 worth they import into Mexico.

But once NAFTA takes effect Jan. 1, that export requirement drops to 80 cents for every $1 in imports, and it will eventually be eliminated altogether.

The changes will allow Ford to consolidate production of the Thunderbird and Mercury Cougar--now produced in both Mexico and the United States--at a plant in Lorain, Ohio.

The company will also expand the models it offers in Mexico, selling U.S.-made Lincoln Mark VIIIs, Aerostar minivans and Explorer sport utility vehicles.

In addition, Ford plans to start selling Escorts in Mexico--both the four-door models made in Hermosillo, Mexico, but currently unavailable at dealerships here, and 11,000 hatchbacks manufactured in Wayne, Mich.

Besides continuing to build the Mercury Grand Marquis and F-series pickups in Cuautitlan, Ford will refit the old plant and call back 300 of the 680 workers laid off this spring to build 75,000 Mystiques and Contours. Two-thirds of those cars will be for export.

Those exports could eventually double or triple, Shaiken predicted.

North of the border, increased exports to Mexico and the manufacturing of components in the United States and Canada for the Mexican assembly plant will generate 550 new jobs and enough overtime to equal 600 jobs, according to Ford spokesman Bert Serre.

The ripple effects will create another 5,000 U.S. jobs, he said.

But Shaiken observed: “Even though there may be short-term job creation in the United States, in the long term what we are likely to see is job creation in Mexico for exports.”