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Ford CEO: Main reason for canceling Mexico plant was market demand, not Trump

CEO Mark Fields told CNBC on Tuesday that President-elect Donald Trump wasn't the main factor when Ford decided to cancel its plans for a $1.6 billion plant in Mexico.

In an interview on CNBC's "Halftime Report," Fields said the decision not move forward with its San Luis Potosi, Mexico, plant was due to market demand.

"The bottom line is we're not seeing the volume and the demand that we expected for that plant. And, therefore, we're looking at our capacity and saying, 'You know what, we can build that in an existing facility and use capacity that we already have,'" he said.

"Over the last couple of years we've seen small cars markedly decline. Every year we're looking at our capacity. We're looking at our forecast for demand. It became very clear that we didn't need this plant."

On Tuesday, Ford announced it will instead invest $700 million in its Flat Rock, Michigan, plant and add 700 direct new jobs. The company said it will continue to build its Ford Focus at an existing plant in Hermosillo, Mexico, to improve company profitability.

Trump has previously slammed the company for plans to move all small-car production to Mexico, andclaimed that he helped stop Ford from shifting an entire factory from Kentucky to Mexico. Ford has repeatedly said it has no plans to close any U.S. plants.

Fields said the company informed Trump and Vice President-elect Mike Pence about its decision. He said they were "very happy" about the new investments in the U.S.

"And we mentioned also at the same time this is what we do as a business," he said. "Listen, we're a global multinational. Our home is here in the U.S. It's really important for us to be strong and vibrant here in our home, and build on the investment in job creation we've been able to produce over the last five years."

Fields also pointed out that the company could do well with a more positive U.S. manufacturing business environment under Trump. "We see the pro-growth policies that he's proposing. So, this is a vote of confidence in what we think the president-elect is going to pursue and it's right for our business," he said.