By on January 3, 2019

General Motors Renaissance Center

As General Motors takes aim at its own foot in the United States, it’s managed to become Mexico’s top automaker by volume. The company saw a nearly 3 percent U.S. decline in the fourth quarter of 2018, during which it announced the shuttering of several U.S. and Canadian facilities as part of a widespread restructuring program aimed at freeing capital for autonomous and electric vehicle development.

Meanwhile, large investments in its Mexican plants over the last few years — coming at the same time as rival Nissan’s scaling back of sedan production — has left GM as the top dog in the region. General Motors and Nissan have spent decades jousting for the top spot south of the border, alternating positions “depending on what has happened in their production levels,” according to Stephanie Brinley, principal analyst at IHS Markit.

The analysis comes via the Detroit Free Press, which predictably surmised that GM’s decision to focus on Mexico was a question of money:

Over the last few years, GM has created or shifted production to Mexico, including the Chevrolet Equinox and GMC Terrain SUVs and Chevrolet Silverado pickups, said UAW President Gary Jones.

In 2016, GM paid hourly workers in its Mexico plants about $1.90 an hour, according to a white paper by Alex Covarrubias, a professor at the University of Sonora in Northern Mexico. The current UAW contract pays GM hourly workers a start rate of $17 an hour and increases to about $28 an hour over an eight-year period, said a UAW spokesman.

Closing Detroit-Hamtramck, Lordstown, Oshawa and two transmission plants puts more than 6,200 jobs at stake. GM also plans to cut close to 8,000 salaried jobs this month. GM said it would save $6 billion by the end of 2020 with these moves.

That’s likely to change in the coming years, as Donald Trump’s USMCA trade deal appears to serve auto employees more directly than NAFTA did, likely resulting in pay increases and better legal protection for Mexican line workers. At the bare minimum, the new labor rules in Trump’s pact with Mexico are supposed to remove some of the incentives that keep many Mexican workers living in poverty while giving them more legal recourse during collective bargaining.

However, none of this offers much in the way of relief for the UAW or Canada’s Unifor, who have both accused GM of outright betrayal. The automaker gradually shifted production to Mexico over the last few years, including high-volume models like the Chevrolet Equinox, GMC Terrain, and HD variants of the Chevrolet Silverado.

“It is time for Americans to stand up for what we know is right for America. We must build where we sell,” UAW President Gary Jones, told union members last month. “It is time to say, ‘No,’ to corporate greed and ‘No,’ to exploiting cheap labor in a downward spiral for wages here and abroad.”

Unifor made concessions to help General Motors during its bankruptcy 10 years ago, explained Jerry Dias, Unifor president. If GM shutters its Oshawa plant, Dias he warned that Canadians will likely boycott GM cars. “They are naïve to believe that Canadians won’t betray them for their blatant disloyalty,” Dias said. “When they needed us, we were there. Mexico never gave them a dime.”

Last month, Canadian union leaders ran multiple full-page ads in the Detroit Free Press and The Detroit News. Unifor has also plead with the automaker’s senior executives in hopes that they could be persuaded replace the Chevrolet Impala and Cadillac XTS sedans and the 2018 Chevrolet Silverado and GMC pickups currently built in Oshawa with new product.

2018 Chevrolet Silverado Z71

[Images: General Motors]

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9 Comments on “General Motors Now Mexico’s Top Automaker, UAW/Unifor Decidedly Annoyed...”


  • avatar
    PrincipalDan

    So when can we expect the ads that say: “Top Automaker in MEXICO.”?

  • avatar
    redapple

    Boycott GM crap.

    I am.

  • avatar
    28-Cars-Later

    “GM paid hourly workers in its Mexico plants about $1.90 an hour”

    Stunning.

    MMGA.

    • 0 avatar
      jatz

      “When Good Jobs Go Bad” by Jeffrey S. Rothstein is a very methodical and eye-opening book so far; I’m about 30% into it.

      Among other things, the no-brainer aspect of abandoning US and Canadian workers for vastly cheaper and more motivated Mexicans in greenfield plants like Silao is thoroughly presented.

  • avatar
    gmichaelj

    CAW says labor for Final Assembly is approx 4% of car’s price. So a $30,000 car would have approx $1,200 in Final Assembly labor (if made in Canada – probably comparable to USA).

    Gross Profit on a car is approx 30% of price – “Car” by Mary Worth, and other sources – I think Autoline Daily has said this too.

    So, after all cost of goods sold, including the Labor above are paid, the contribution margin of a $30,000 car is approx. $10,000 which pays for Engineers, Secretaries, Execs, shareholders (who are ALL the same nationality as the Car-maker).

    Yes, blue collar workers are hurt, but the US economy is about 5 times better off if you buy a US engineered car made in Mexico than if you buy a Jap/Ger/Kor engineered car assembled here in the USA.

    • 0 avatar
      Jessie Pinkman

      Hmmm. The economy is better off buying a GM? What about the consumer?

      He is better off buying a Jap/Ger/Kor engineered car in the US. I mean for his hard earned money it will certainly last longer and have fewer repairs.

      GM has proven itself over and over each decade. Each time they loose more diehard customers. How many times can one company screw the American public?

      Hopefully the Americans will be a little smarter when the next GM bail out occurs. More sooner then later

      • 0 avatar
        PrincipalDan

        Gross Profit on a car is approx 30% of price…

        Again back to harping on utilization of factory capacity is very important. FCA is running the Grand Cherokee and Durango factory at over 100% of capacity. They are certainly making a profit.

        GM factory’s running at 50%? It doesn’t matter what the sale price is, there ain’t no effin’ way there’s profit in that.


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