Confirming rumors that leaked yesterday, GM has just announced plans to invest $1 billion in its U.S. manufacturing operations and add 7,000 jobs domestically, over the next "few years". Of course, the move follows similar announcements from Ford and Fiat-Chrysler over recent weeks in an apparent effort to appease the incoming Trump administration amid threats of a 35% import tariff and after years of outsourcing automotive manufacturing jobs to Mexico. To add icing to the cake, GM notes that 450 of the new jobs will come from insourcing jobs previously moved to Mexico. Per General Motors:
General Motors today announced that it will invest an additional $1 billion in U.S. manufacturing operations. These investments follow $2.9 billion announced in 2016 and more than $21 billion GM has invested in its U.S. operations since 2009.
The new investments cover multiple new vehicle, advanced technology and component projects. A combination of 1,500 new and retained jobs are tied to the new investments. Details of individual projects will be announced throughout the year.
The company also announced it will begin work on insourcing axle production for its next generation full-size pickup trucks, including work previously done in Mexico, to operations in Michigan, creating 450 U.S. jobs.
"As the U.S. manufacturing base increases its competitiveness, we are able to further increase our investment, resulting in more jobs for America and better results for our owners,” said GM Chairman and CEO Mary Barra. “The U.S. is our home market and we are committed to growth that is good for our employees, dealers, and suppliers and supports our continued effort to drive shareholder value.”
“We will continue our commitment to driving a more efficient business,” said Barra, “as shown by our insourcing of more than 6,000 IT jobs that were formerly outside the U.S., streamlining our engineering operations from seven to three, with the core engineering center being in Warren, Michigan, and building on our momentum at GM Financial and in advanced technologies. These moves, and others, are expected to result in more than 5,000 new jobs in the U.S. over the next few years.”
GM also highlighted their efforts to work with tier two suppliers to "insource" those manufacturing jobs as well.
GM has also been facilitating its supplier base to do the same. The company has been executing a strategy to create supplier parks adjacent to its U.S. manufacturing sites (already accomplished at GM’s Fairfax Assembly Plant in Kansas, Spring Hill Assembly Plant in Tennessee, Fort Wayne Assembly Plant in Indiana, and Lordstown Assembly Plant in Ohio), and will continue to expand this effort. Supplier parks locating near assembly plants result in significant savings from reduced transportation costs, higher quality communications and continuous improvement activities as suppliers are located closer to the final assembly location.
In addition, GM is confirming that another supplier has committed to make components for GM’s next-generation full size pick-up trucks in Michigan, moving 100 supplier jobs from Mexico to the U.S.
And, or course, it didn't take Trump long to declare victory on Twitter:
With all of the jobs I am bringing back into the U.S. (even before taking office), with all of the new auto plants coming back into our.....
— Donald J. Trump (@realDonaldTrump) January 17, 2017
country and with the massive cost reductions I have negotiated on military purchases and more, I believe the people are seeing "big stuff."
— Donald J. Trump (@realDonaldTrump) January 17, 2017
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For those who missed it, here is what we posted yesterday:
Not a week seems to pass without some an automaker, foreign or domestic, making an unexpected round of concessions when it comes to Trump's ambitions to "Make it in the US."
And so, days after first Ford, then Fiat Chrysler announced major expansion plans in the US (to the partial detriment of Mexico) the latest automaker to respond to Trump's Twitter criticism is General Motors, which according to the WSJ, will announce this week plans to invest at least $1 billion across several U.S. factories "a move aimed at underlining its commitment to U.S. manufacturing jobs in the wake of President-elect Donald Trump’s criticism of the auto maker’s imports from Mexico."
The company will also announce that it will create more than 1,000 new jobs stemming from the investment but doesn’t plan to specify which of its factories are in line for more work.
The move comes days after Mr. Trump publicly ratcheted up pressure on the nation’s largest auto maker. During his press conference last week, the president-elect thanked Ford Motor Co. and Fiat Chrysler Automobiles for recently announced U.S. investment plans that are expected to create a combined 2,700 jobs.
He then turned up the heat on GM to follow suit. “I hope that General Motors will be following. And I think they will be,” Mr. Trump said.
They did indeed, even if GM's response was largely predictable. Recall that GM CEO Mary Barro was appointed to Trump's Strategic and Policy Forum, which as a reminder "is composed of some of America’s most highly respected and successful business leaders, will be called upon to meet with the President frequently to share their specific experience and knowledge as the President implements his plan to bring back jobs and Make America Great Again."
It would look confusing if one of Trump's own economic policy advisors looked the other way when practicing what Trump is preaching.
On January 3, Trump launched the opening salvo in this brief but productive "negotiation", when he tweeted that “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!.”
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
GM picked the middle option: to invest money in the US, creating new jobs.
In keeping with the narrative proferred by other carmakers, in an interview with the WSJ, GM general counsel Craig Glidden declined to confirm specifics of the announcement but said any investment the company might disclose has been long planned and isn’t a response to pressure from Mr. Trump.
“This is something we’ve been undertaking for some period of time,” he said. “It’s really getting our story told in a way that is I think complete and fulsome.”