Auto giant Ford is planning a new assembly plant south of the U.S. border, the Wall Street Journal reported Sunday, and will sharply increase factory output from Mexico just months after signing a labor deal.

Citing people familiar with the matter, The Journal reported that Ford will add half a million units of annual capacity from Mexico starting in 2018, which is double the amount it built in 2015. The new assembly complex will be based in San Luis Potosi, and Ford will expand an existing facility near Mexico City, the publication added.

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The move may heighten the debate over cheaper foreign labor. According to the Bureau of Labor Statistics, Manufacturing labor costs in Mexico are approximately 1/5 of those in the United States. In November, Ford signed a new labor contract that gave factory workers higher wages. A Ford spokesperson did not immediately return CNBC's request for comment.

The full report can be found on the Wall Street Journal's website.





