Ford scraps plans for $1.6bn Mexican plant in favour of US factory following Trump criticism

Car giant Ford Motor Company said it will cancel plans to build a new $1.6bn (£1.3bn) plant in Mexico, deciding to instead invest $700m and add 700 jobs at an existing Michigan factory, following sustained criticism from US President-elect Donald Trump.

Trump has strongly criticised major US firms for moving jobs outside America to areas with cheaper labour markets to boost profits.

Ford said at a Michigan press conference it was making its investment in its Flat Rock plant, making able to manufacture high-tech electrified and autonomous vehicles, as well as its iconic Mustang Lincoln Continental marques.

It also added it would scrap previously announced plans to build a new state-of-the-art factory in San Luis Potosi, Mexico.

America's second-largest carmaker had come under harsh criticism from Trump during the election for its Mexican investment plans.

Ford president and chief executive Mark Fields said: "Our investments and expanding lineup reflect our view that global offerings of electrified vehicles will exceed gasoline-powered vehicles within the next 15 years."

UAW union vice president National Ford Department Jimmy Settles added: "I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers."

However, Ford maintained that it will build its next-generation Focus cars at an existing plant in Hermosillo, Mexico, in a bid "to improve company profitability".

The move comes as Trump took to Twitter today (3 January) and insisted that rival US car giant General Motors should pay border taxes or build its cars in the US.

Trump said: "General Motors is sending Mexican made models of Chevy Cruze to US car dealers-tax free across border. Make in U.S.A. or pay big border tax!."

However, General Motors replied that most of its Chevy Cruze cars were produced in the US and only the hatchback model, which accounts for just a small percentage of sales, was made south of the border.