GM Brings $1 Billion to the Make America(n Manufacturing) Great Again Party, Recalls Axle Work From Mexico
Not wanting to be left out of the flurry of recent U.S. investment announcements from various automakers, General Motors arrived at the party with cash in hand and second thoughts about Mexico.
GM says it will invest an extra $1 billion in its U.S. operations, with the cash covering several new vehicle projects, as well as some advanced technologies and components initiatives. The funding comes hot on the heels of similar announcements from Ford, Fiat Chrysler Automobiles and, just this morning, Hyundai/Kia.
In a nod to the political climate in America, GM will shuffle some outsourced parts production back to U.S. soil.
A billion dollars isn’t a huge amount when contrasted with the $21 billion ponied up by GM since 2009, but a union would say that every bit counts. Also, symbolism breeds emotional capital. Part of GM’s plan includes returning axle production for its next-generation full-size pickups to U.S. soil, creating 450 jobs in the process.
A second supplier tapped for the next-gen trucks will create a further 100 jobs by manufacturing its components in Michigan. Overall, GM expects the cash injection to create or save 1,500 jobs (it won’t break down the numbers).
“The U.S. is our home market and we are committed to growth that is good for our employees, dealers, and suppliers and supports our continued effort to drive shareholder value,” said GM Chairman and CEO Mary Barra in a statement.
Automakers in all jurisdictions seem eager to placate President-elect Trump, who has promised a tariff on vehicles imported from Mexico.
Recently, Ford scrapped plans to build a $1.6 billion Mexican small car plant — likely because it wasn’t worth the expenditure — and offered up $700 million to modernize its Flat Rock, Michigan plant. For its part, FCA began the New Year by promising $1 billion to two assembly plants, including the Warren facility chosen for the upcoming Jeep Wagoneer and Grand Wagoneer. That investment was needed, as FCA had nowhere to build the big-profit Jeeps.
[Image: General Motors]
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Like him or not, and even before officially taking office, Trump seems to have made it "politically incorrect" for companies to send jobs out of the U.S., or at least announce that they are sending jobs out of the U.S. While it may or may not result in jobs actually returning, it is arguably a good start.
Personally, I think Trump is playing a dangerous game that may backfire. What happen if the EU decides to retaliate and place a 35% tax on Boeing airplanes for example? Or actually hold companies like Apple, Amazon and Starbucks liable for tax in the countries they do business instead of allowing shell holdings in tax havens? The USA has a lot to lose in a trade war, and not a lot to gain. You're not going to see F150's becoming the default vehicle in Germany for example. Much of the US domestic car production is unsellable in any volume outside of North America.