New York, 31 May 2008: U.S automotive giant Ford will invest $3bn in a new car plant in Mexico, the biggest investment in the country's manufacturing sector.

The move is a blow to American car workers who had hoped the factory would be built in the United States.

Ford has lost more than $15bn over the past two years and says the new facility is crucial to its future.

Click here to test drive the Fiesta 

Mexican President Mr.Felipe Calderon hailed the announcement as a "turning point" for his country.

The new factory, and other changes to Ford's Mexican operations, are likely to create an estimated 4,500 jobs in Mexico, where car workers earn substantially less than their American counterparts.

Mr.Calderon made the announcement with Ford President Mr.Alan Mullaly at the presidential compound in Mexico City on Friday.

"We want Mexico to be an automotive country, one that is competitive and with the most advantages so that the worldwide automotive industry will establish itself here," Mr.Calderon said.

The factory will build Ford's new Fiesta sub-compact car, which is the company's attempt to shift towards the fast-growing market for smaller, more fuel-efficient cars.

It will be located near Mexico City and the plant is expected to start delivering the Fiesta to the U.S market in 2010.

Ford's plans in Mexico also include moving one of its factories from large truck to small car production, and opening a new diesel engine line at another plant.

Click here to test drive the Fiesta