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GM Invests Millions in Mexico

Karla Salinas | 20.10.2016

In addition to lower labor costs, Mexico also offers a network of international trade deals and proximity to the U.S. car market.

General Motors Co. is advancing on an $800 million investment for its global small-car lineup that includes a factory retooling in San Luis Potosi state. That plant and another facility in Mexico will also build the all-new Chevy Equinox sport-utility vehicle next year, people familiar with the matter said.

GM has been clear about its investment in Mexico, starting with an announcement in late 2014 that it would spend $5 billion there.

GM’s investment in its factory in the Mexican state of San Luis Potosi was initially announced in November 2015, without specific plans or details. The plan came in addition to the $5 billion the company said it would invest in December 2014 to expand and retool existing plants in the country.

GM says it isn’t hiding its investment in Mexico. “For competitive reasons – especially as it relates to future product - the specific details behind the investments get rolled out as we deem appropriate,” Pat Morrissey, a spokesman for the automaker, wrote in an e-mail.

Morrissey also said GM has invested $20 billion in its U.S. operations since 2009 and employs 97,000 people in the U.S. and 15,000 in Mexico.

In past years, GM has been vocal in promoting its new investments in Mexico. It held a ribbon-cutting ceremony for a new railway extension in San Luis Potosi in 2014, invited a governor to announce an expansion in Coahuila in 2010, and fired off press releases detailing even its smallest investments -- including an $87 million contribution to a stamping plant in March 2015.

That same month it also announced a new model it would produce in Mexico: the new generation Chevrolet Cruze.

The automaker has confirmed it will build the Chevrolet Equinox at a plant in Ingersoll, Ontario. GM also said it would make the Equinox and its stablemate, the GMC Terrain, at two other unidentified factories.

Mexican Benefits

Labor costs that are about a fifth of U.S. levels have lured most carmakers to set up shop or expand in Mexico in recent years. Since the beginning of 2010, Mexico has snared $25.8 billion in announced investments, according to the Center for Automotive Research in Ann Arbor, Michigan.

Kia Motors Corp. and Volkswagen AG’s luxury Audi unit inaugurated billion-dollar plants last month. A joint venture of Daimler AG and Nissan Motor Co. is working on a factory that will assemble compact vehicles, while Toyota Motor Corp. plans to produce Corollas. BMW AG is also building a plant.

In addition to lower labor costs, Mexico also offers a network of international trade deals and proximity to the U.S. car market.

“Mexico’s free trade agreements, geography and labor costs make it more attractive than Brazil,” Horacio Chavez, Kia’s Mexico country chief, said in an interview last month. “It allows us to reach many markets.”

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