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Ford Ramps Up $1.3-Billion Manufacturing Initiative in China

Ford Motor Co. broke ground this week on two huge assembly plants in China, a $1.3-billion initiative aimed at securing the lion’s share of the Chinese auto market for the U.S. automaker. CEO Alan Mulally presided over both ceremonies during a three-day tour of China which ended Wednesday.

Ford broke ground on a $600-million plant in the southwestern Chinese city of Chongqing on Monday and on Tuesday announced it will bring its Lincoln luxury brand to China in 2014. On Wednesday, Mulally wielded the shovel again at the site of a new assembly plant in the eastern city of Hangzhou. The $760 million plant, which is Ford’s first plant on the populous east coast of China, is expected to open in 2015.

Ford is in the midst of its biggest production expansion in 50 years in China. Ford says the new plants are key to its plan to increase global sales by 50 percent to 8 million by 2015.

According to an Associated Press report, Ford is developing a lower-priced small car for the Chinese market but has no plans to start a separate, cheaper brand in China as rivals General Motors and Volkswagen have.

“Hangzhou is really critical because of the market it serves, and it diversifies our operations,” CEO Alan Mulally said after shoveling some dirt in a ceremony with local officials. He said the city has good infrastructure and a trained workforce that will help Ford expand.

Ford won’t say what it plans to build there, but Ford China CEO Dave Shoch confirmed this week that a new small car similar to the Chevrolet Sail will be among the eight vehicles Ford is bringing to China by 2015.

Ford Asia Pacific chief Joe Hinrichs told AP the company learned a lot from the development of the Figo, a $6,800 subcompact it sells in India. But Ford won’t sell the Figo, which is smaller than the Fiesta, in China, Hinrichs said, in part because it’s a right-hand drive car.

Hinrichs said Ford is studying whether to form a new brand, but thinks China, which has more than 100 car companies, has too many brands already. So far, the government has approved Ford’s growth plans without insisting on a new brand, he told AP.

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