General Motors plans to increase efficiency at its Arlington, Texas, assembly plant by locating suppliers closer to home with a new park, bringing jobs from Mexico into the U.S.
Supplier parks located near assembly plants typically result in significant savings from reduced transportation costs, better communications and continuous improvement activities, GM said.
But more imminent political events -- such as proposed changes to the North American Free Trade Agreement by President Donald Trump's administration, and a border-adjustment tax considered by Republican lawmakers -- could increase expenses for companies importing parts.
The park will feature two industrial manufacturing and warehouse buildings and will house up to 1,250 employees. The site will pull 850 jobs to the area, 600 of which the company estimates will come directly from Mexico, GM spokesman Nick Richards said, and will be fully operational by the end of 2018.
"This new supplier park will create improved logistics efficiency and coordination, while also bringing significant employment opportunities to Arlington," GM purchasing chief Steve Kiefer said in a statement.
Expansion in Arlington is part of GM's $1 billion pledge to reinvest in U.S. operations. The new park positions will supplement the 1,500 manufacturing jobs the company said will be created or retained in the U.S. GM did not say how many of the jobs would be new as opposed to positions that otherwise would have been outsourced or eliminated without the investment.
The venture has received a lot of state and federal support, Richards said. Sen. Ted Cruz, R-Texas, praised the venture in a speech at the announcement Friday morning. Earlier this week, the Arlington City Council approved tax incentives worth $13.3 million over 10 years to assist the development, the Star Tribune reported.
Currently, GM employs about 4,225 people at the Arlington assembly plant, producing the Chevrolet Tahoe and Suburban, GMC Yukon and Cadillac Escalade.
Several suppliers will operate out of the park, but so far GM has announced only that IAC Group will be moving in. IAC's founder is Wilbur Ross, Trump's secretary of commerce.
The supplier ranks No. 43 on Automotive News' list of the top 100 global suppliers based on 2015 worldwide sales from automakers. It supplies cockpits, instrument panels, flooring and acoustics.