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Is GM's $5.4b U.S. investment an olive branch to UAW after major Mexican spend?

A report that General Motors Co. has announced plans to invest $5.4 billion in its U.S. plants over the next three years hit all the major business news media today. A report from Reuters quoted Cathy Clegg, GM North American manufacturing chief, as saying that the "common thread" among GM's investments "is the focus on product improvements," and adding that "the overall investments would create 650 jobs and retain more than 15,000 existing positions."

Clare Goldsberry

May 1, 2015

3 Min Read
Is GM's $5.4b U.S. investment an olive branch to UAW after major Mexican spend?

A report that General Motors Co. has announced plans to invest $5.4 billion in its U.S. plants over the next three years hit all the major business news media today. A report from Reuters quoted Cathy Clegg, GM North American manufacturing chief, as saying that the "common thread" among GM's investments "is the focus on product improvements," and adding that "the overall investments would create 650 jobs and retain more than 15,000 existing positions."

GM-investment.jpgReuters noted that this announcement "comes as GM and the United Auto Workers union gear up for negotiations on a new master contract this fall for roughly 50,000 U.S. hourly workers. UAW leaders have pushed for the Detroit automakers to invest in union-represented factories."

GM has slated about $784 million of the total investment for three Michigan plants, and release information about the remaining investment later, according to Reuters. "The Detroit company said it will spend $520 million on tooling and equipment for new vehicle programs at its Lansing Delta Township assembly plant, $139.5 for a new body shop and stamping facility at pre-production operations in Warren, MI, and $124 million at the Pontiac, MI, stamping plant, where top executives will make the announcement," said Reuters.

"Separately, GM is weighing a $1.3 billion investment in its large SUV plant in Arlington, Texas, that would add 589 jobs."

There was some speculation in the various reports that GM's announcement is meant to assuage the UAW after announcing in December plans to invest $5 billion to modernize and expand its four factories in Mexico. A reporter, Tom Krisher, for the Associated Press noted that in March, GM said "it would spend $350 million on its Ramos Arzipe assembly plant so it can build the compact Chevrolet Cruze."

In the March/April issue of MexicoNow, a trade publication covering manufacturing in Mexico, an extensive automotive report reviewed Mexico's automotive OEM investment announcements from 2010-2014 that total US$19.3 billion. Announcements came from just about every global automotive OEM, including several announcements over those five years from Nissan, Honda, Ford, Mazda, Volkswagen, General Motors, Audi, Diamler, and Kia, a total of 26 projects listed in the report.

In 2014, Mexico had 18.7% of North American light vehicle production. That is estimated to rise to 27.5% by 2020, according to IHS sources for MexicoNow. Automotive OEM plants as well as supplier facilities dot just about every state in Mexico, showing the strength of automotive manufacturing in Mexico. In fact, Mexico was the sixth largest producer of auto parts in the world with a production value of U.S.$76.8 billion in 2013, said MexicoNow's report. "The forecast is that Mexico would increase that figure to U.S.$81.5 billion in 2014.

According to the Center for Automotive Research (CAR) in the latest CAR newsletter, a front-page article noted that: "In recent years, a share of automotive investment has occurred in Mexico. Since the 2009 recession, Mexico's share of total new North American automotive-related investment has risen from 9% to 27%, while the Unites States' share decreased from 85% to 67%. In that same time period, eight automakers announced their intention to build new assembly plants in Mexico, compared to no new assembly plant announcements in Canada and the United States." Wages are a primary factor for automotive manufacturing growth in Mexico. For automotive workers in Mexico wages are about $7.79/hour; wages in the U.S. are approximately $37.38/hour and $39.04 per hour in Canada.

[Image:© General Motors]

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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