GM plans $1 billion investment in US
SOUTHFIELD: General Motors (GM), facing pressure from President-elect Donald Trump, will invest $1 billion in US plants over several years, a person familiar with the matter said.
The largest US automaker expects to create or retain 1,000 jobs at several existing facilities, said the person, who asked not to be named ahead of an announcement expected later on Tuesday. The investment announcement, which is being accelerated amid pressure from the president-elect, are related to building products that were in the works and approved before Trump won the election in November, the person said.
Factory investments
GM becomes just the latest the first automaker to announce US factory investments in response to Trump. Rivals Ford Motor and Fiat Chrysler Automobiles have each said this month they’ll spend on US plants after Trump threatened for months to slap Mexicobuilt vehicles with a 35 per cent import tax. Automakers are eager to cooperate with the incoming administration as they prepare to ask for favours including lessstringent fuel economy rules and lower corporate taxes.
“This is the normal course of business,” said Maryann Keller, an independent auto industry consultant in Stamford, Connecticut. “All they’re doing is announcing investments that they would have made anyway.”
Less than two minutes into his first formal press conference since the election, Trump highlighted Ford’s decision to cancel a $1.6 billion factory in Mexico and expand an existing plant in Michigan. Fiat Chrysler committed $1 billion toward making three new Jeeps in the US and enabling a Michigan facility to build a Ram pickup now produced in Mexico.
“I hope that General Motors will be following and I think they will be,” Trump said on Wednesday at Trump Tower in Manhattan. “I think a lot of people will be following. I think a lot of industries are going to be coming back.”
Capital expenditures
GM budgets about $9 billion a year toward capital expenditures, including for new models and factory upgrades. The automaker announced at least $2.9 billion in US investments for future production of engines and vehicles in 2016.
Trump targeted GM earlier this month for importing a small number of Chevrolet Cruze hatchback models from Mexico to the US. The automaker made separate announcements last year that it would permanently cut 3,300 jobs at three passenger-car plants and temporarily slow production at five factories in states including Michigan and Ohio, due to slack demand.
Mexican plans
GM also continues to invest in Mexico. In late 2014, the company said it would spend $5 billion on new plants in the country by 2018, creating 5,600 jobs. Facilities making the Chevrolet Equinox and GMC Terrain, which debuted last week at the North American International Auto Show in Detroit, account for about $1 billion of those outlays.
The auto industry has been in Trump’s cross hairs. He has threatened Japan’s Toyota Motor Corp. and Germany’s BMW AG with tariffs on their Mexicanmade cars. BMW sees “no reason” to change its plans in Mexico, Peter Schwarzenbauer, who heads BMW’s Mini and Rolls-Royce brands as well as BMW’s car-sharing business, told reporters on the sidelines of a conference in Munich.