GM brings back jobs from Mexico, invests in U.S. plants

Donald Trump said his actions led the world’s second-largest automaker to declare a $1 billion investment in U.S. manufacturing operations this year.    General Motors on Tuesday announced it will invest $1 billion to upgrade and expand U.S. manufacturing facilities, which it said would result in creating and retaining 1,500 jobs. The news comes days after President-elect Donald Trump criticized the company on Twitter for importing the Chevy Cruze model from Mexico, and threatening it with a 35 percent tariff if it didn’t produce the cars in the United States.
   GM responded last week that it makes all Cruze sedans in Ohio and that it only imports hatchbacks from Mexico, which represent about 2.4 percent of total Cruze sales in the United States.
   Trump, who takes office on Friday, has spent the transition period doubling down on his tough stance on trade and outsourcing, a theme that helped carry him to the presidency as many Americans in the Midwest tied manufacturing losses in their communities to companies moving production to low-cost countries. He has singled out automakers for particular attention, publicly scolding Ford, Toyota, BMW, Volkswagen, and Daimler (Mercedes) in addition to GM, while praising Fiat Chrysler, which preemptively announced some domestic investments last week.
   GM said the new investments are for multiple new vehicles, advanced technology and component projects. It also announced that will begin efforts to insource axle production to Michigan for its next-generation full-size pickup trucks, including work previously done in Mexico, creating an additional 450 jobs in the United States.
   “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,” GM Chairman and CEO Mary Barra said in a statement. “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.”
   Trump, as he did when Ford recently canceled plans for a Mexican plant in favor of U.S. investments, took credit for saving U.S. jobs.
   “With all 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 country, and with the massive cost reductions I have negotiated on military purchases and more, I believe the people are seeing ‘big stuff,’” he tweeted. In a follow-up tweet, he said, “Thank you to GM and Walmart for starting the big jobs push back into the U.S.”
   Walmart on Tuesday said it will spend $6.8 billion on store, distribution center and service expansion, leading to 10,000 new retail jobs.
   Analysts point out that automakers and other corporations don’t pivot on a dime to make such large investment decisions. The companies simply accelerated announcement of plans that were already in the pipeline to generate good will with Trump, according to inferences from executives and media reports.
   The second issue of the new “Adam Smith Project” includes a commentary, “Playing the Trump PR game,” which explains what’s really happening when manufacturers say they are reversing plans to build facilities in Mexico.
   In fact, GM invested $2.9 billion in its U.S. assembly plants in 2016 and more than $21 billion since 2009. And it is in the midst of a four-year strategic plan to streamline operations, which it says has created 19,000 engineering, information technology and professional jobs, as well has 6,000 hourly manufacturing jobs during that period, while reducing more than 15,000 positions outside the United States. In 2012, 90 percent of the company’s IT work was stationed overseas, but since then, most of it has been brought back to the home front.
   “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, Mich., 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 said it is also encouraging suppliers to relocate closer to some of its major assembly plants. 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). 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.
   GM also confirmed that one of its suppliers 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 United States.