Ford plans $550 million plant upgrade

Ford Motor Co on Wednesday unveiled a $550 million investment to convert an SUV plant near Detroit to build a new generation of Focus small cars next year and a battery-electric Focus in 2011.

The announcement by Ford comes less than a week after rival Chrysler filed for bankruptcy to complete a sale to a company held by Fiat SpA , a United Auto Workers retiree healthcare trust, and the U.S. and Canadian governments.

Chrysler expects to leave some U.S. plants behind in the reorganization that could be completed within 60 days. Larger rival General Motors Corp also is expected to close some plants in a restructuring that faces a June 1 deadline.

Ford, which has not taken any emergency U.S. government loans, is converting three of its large North American truck plants to produce smaller more fuel-efficient vehicles under a broad restructuring that started several years ago.

The automaker posted a company record $14.7 billion net loss in 2008, but posted a smaller-than-expected first-quarter loss and said in late April that it was on track to at least break-even in 2011.

The investment includes $430 million for manufacturing and $120 million for launch and engineering costs and Ford said it would also make significant investments in supplier tooling.

Ford said the investment would draw more than $160 million of Michigan state, county and local tax credits and grants and support about 3,200 jobs. Ford and the UAW are developing new plant work rules to improve productivity, the automaker said.

The transformation of Michigan Assembly Plant embodies the larger transformation under way at Ford, Ford Chief Executive Alan Mulally said in a statement.

The automaker's Michigan Truck facility in Wayne, Michigan, is the first of the plants to undergo a conversion. It formerly built the Ford Expedition and Lincoln Navigator large sport-utility vehicles and has been renamed Michigan Assembly.

The Michigan Assembly plant opened in 1957 and was one of the most profitable plants in the world during the SUV sales boom in the late 1990s.

Ford also is converting its Cuautitlan Assembly plant in Mexico to build the Fiesta subcompact early in 2010 and will convert its Louisville, Kentucky, Assembly plant to build small vehicles starting in 2011.

The automaker developed the new generation of the Focus off a European vehicle platform that it expects to provide more than 2 million units of sales globally, giving the automaker economies of scale to improve profitability.

Ford and Magna International Inc are developing the battery-electric Focus. It will have a lithium-ion battery pack that can be charged at a standard outlet and is part of a broad electrification plan Ford announced in January.

(Reporting by David Bailey, editing by Dave Zimmerman)