While Ford are making some headway in North America, their real Western Hemisphere focus is on the growth market of Brazil. Bloomberg reports that Ford will invest 4 billion Brazilian Reals (that’s $2.3 billion to you lot, I only deal in UK pounds) on Brazilian production capacity. Naturally, Ford aren’t doing this alone, the Brazilian government are offering the usual (as yet undisclosed) state and federal tax breaks to Ford. The investment will add to Fiesta capacity at the Camacari factory and help modernize the Troller plant that builds utility vehicles. Ford’s Q3 pretax profit in South America fell nearly in half to $247 million, as revenue dropped 22 percent to $2.1 billion. Though Ford blames currency issues for the drop, soon-to-expire government incentives have been keeping the Brazilian market afloat. Maybe it’s not “Fiesta” time yet.

One of the most overlooked arguments during last year’s bailout debates was the fact that America’s automotive industry was not under threat. Sure, a few companies based in Detroit were panhandling at death’s door, but so-called “import brands” have been closing the gap in terms of Americans employed for years. And America’s transplant auto industry is continuing to grow. Even as the Detroit firms have slimmed down their North American manufacturing footprints, foreign firms are moving ahead with American and NAFTA-area plants despite the economic downturn. Not only do these moves signify possible new jobs, they also represent a long-term bet on the fundamental strength of the US economy.
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The engine in question is Fiat’s 1.4 liter “Fire,” planned for use in the Fiat 500 as well as planned Dodge and Chrysler B-segment hatchbacks. Automotive News [sub] reports that the Michigan Economic Growth Authority has authorized ten years worth of employment tax credits if Chrysler builds the engines at an unused plant in Dundee, MI. But the credits are only worth an estimated $4.6m, and MEGA admits that that building the engines in Mexico would be cheaper for Chrysler. The most important factor: the engine will primarily power the Fiat 500, which will be built in Toluca, Mexico. Since most of the 500s built in Toluca will be headed to the Brazilian market, Michigan engine production makes even less sense. And since there won’t be any other North American products using the 100 hp, 92 lb-ft engine until 2013 (if the Fiatsler experiment even makes it that far), there’s almost no reason for Michigan to build these engines. Still, with 250k units planned annually, it’s no wonder MEGA dangled tax credits anyway. Besides, there’s one more wrinkle: one of the ways Fiat can gain another five percent of Chrysler’s imaginary equity is to “manufacture state-of-the-art, next-generation engines at a U.S. Chrysler facility.” Fiatsler is bringing Fiat back to the US as a one-model-brand (500) with a dedicated sales and support staff just to meet one of these government benchmarks… will they be crazy enough to build an engine in Michigan and ship them to Mexico to meet another?