GM invests millions in Mexico as Ford absorbs Trump's blows
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October 14, 2016 01:00 AM

GM invests millions in Mexico as Ford absorbs Trump's blows

Andrea Navarro
Nacha Cattan
David Welch
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    GM has only said that the 2018 Chevrolet Equinox will be built in a factory in Canada and two other sites, keeping mum about Mexico and avoiding both attention from Donald Trump and the chance that the news might have roiled labor talks in Canada last month.

    After more than a year of watching Republican presidential candidate Donald Trump bash Ford Motor Co. for moving jobs to Mexico, General Motors Co. has pushed ahead with its own expansion. It just hasn't said as much as Ford.

    GM 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 factory in Mexico will also build the redesigned Chevy Equinox crossover next year, people familiar with the matter said.

    The automaker has only said that the next Equinox will be built in a factory in Canada and two other sites, keeping mum about Mexico and avoiding both attention from Trump and the chance that the news might have roiled labor talks in Canada last month, said the people, who asked not to be identified because the matter is private.

    Taking a lower profile has kept GM out of Trump's cross-hairs and helped the Detroit company reach an agreement with its Canadian union, even as the Republican candidate singled out Ford's latest Mexican factory plan as "an absolute disgrace."

    For Mexico, GM's tight-lipped approach hints at how U.S. companies might operate if Trump wins the election after campaigning against the North American Free Trade Agreement.

    "Big American companies are being cautious, they don't want to have issues with the presidential candidates," Mario Chacon, head of global business promotion at Mexico's foreign investment agency, said in an interview. "They're feeling repressed because anything they say can be used against them."

    GM has been clear about its investment in Mexico, starting with an announcement in late 2014 that it would spend $5 billion there. The automaker just hasn't said much about the details since then.

    Ford splash

    Ford made a splash in April when, in the heart of primary season, the company said it would invest $1.6 billion in Mexico to make small cars. Ford CEO Mark Fields then said in September that the company would move all small-car production there.

    Trump's attacks have forced a reaction from Ford Chairman Bill Ford, who is great-grandson of the company's founder. Ford said in late September that the company makes more cars in the U.S. than any other automaker and that, "we are everything that he should be celebrating about this country."

    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.

    Investing 'quietly'

    By contrast, GM has no press statements on its website about investments in Mexico this year. There has been no information about the Equinox in Mexico, nor on where all of the $800 million pledged in November would be spent.

    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.

    "Companies don't halt their investment decisions for political reasons, they simply do it quietly," Chacon said. "No company wants to have big announcements now because they could see a negative reaction from unions in other countries. So decisions aren't made out in the open but they continue. They can't stop."

    GM President Dan Ammann had little to say about the political controversy that has embroiled Ford during election season. "We're observing," Ammann said in an interview with Bloomberg.

    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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