GM to move production of SUV to Mexico

REVAMPED TERRAIN

low-priced compact cars from south of the border. While the companies also sell these models in emerging markets, GMC is chiefly a U.S. brand with premium SUVs that have fatter sticker prices and higher profit margins than small cars.

“I’m sure we’ll see a tweet” said Kristin Dziczek, analyst at the Center for Automotive Research in Ann Arbor, Mich.

“Labour costs are part of it, but it’s a competitive issue. Once some of the manufacturers go down there, more of them have to.”

The 2015 labour agreement with the United Auto Workers union boosted wages and benefits for thousands of younger U.S. employees who previously made much less than veteran factory hands. Mexican autoworkers earn an average of US$8.24 an hour in pay and benefits, compared with years.

“It’s one of the fastest growing segments of the market, and we believe we can get a bigger share of it,” Aldred said in an interview.

Terrain customers can choose from three different turbo-charged engines GM says can deliver strong acceleration with good fuel economy. The Terrain also has 4G wireless capability, a Wi-Fi hot spot and safety features including Forward Collision Alert that warns drivers of an impending crash, Lane Keep Assist with Lane Departure Warning and a Rear Cross Traffic Alert camera.

Some of the added production in Mexico is earmarked for overseas. That’s partly because of Mexico’s 44 free-trade deals with other countries, which allow GM to export vehicles tariff-free to markets where it doesn’t have similar agreements, including Brazil, Colombia and the European Union.

In late 2014, GM said it would invest $5 billion in new plants in Mexico by 2018, creating 5,600 jobs. The Equinox and Terrain facilities, which also make other models, are roughly $1 billion of that. In 2015, GM said it is investing $5.4 billion in plants in the U.S.

That year, the UAW negotiated a four-year U.S. labour deal that gave veteran workers at GM, Ford Motor Co. and Fiat Chrysler Automobiles NV two three per cent raises and two cash payouts equal to four per cent of their pay. Entry-level, or so-called Tier 2, workers — who once started at less than US$16 an hour and topped out at US$20 — now start at US$17 and grow into the union’s traditional US$29. Those at Ford and GM also get the top-flight health insurance of their Tier 1 coworkers.

Trump has complained about American companies shifting jobs to Mexico since the election campaign, when he criticized Ford for moving Focus compact-car production. While the Dearborn, Mich.-based automaker will go ahead with that change, it’s abandoning plans to invest US$1.6 billion there.

“Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S.” Trump tweeted. “This is just the beginning — much more to follow.”