GM will invest $1 billion in US manufacturing
General Motors announced on Tuesday that it will invest $1 billion in its US operations, bringing total investments since the carmaker emerged from bankruptcy in 2009 to $21 billion.
The investment was expected and planned by GM, but the timing couldn't be better for the company, as Donald Trump prepares to take office as the 45th President on a platform of restoring US manufacturing employment.
"As the US. 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 CEO Mary Barra said in a statement.
"The US 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."
According to GM, 450 jobs will be brought back to the US from Mexico, where axle-production for pickup trucks has been taking place.
The carmaker also pointed it that it has returned thousands of what it described as "IT jobs" to the US.
It's important to looks closely at GM's announcement in terms of the overall business case it's pursuing with this move. The company doesn't appear to have committed to additional US-based assembly plants, continuing a policy of working with its existing manufacturing footprint on that front.
However, an expansion of the supplier network is underway.
"The company has been executing a strategy to create supplier parks adjacent to its US 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," the automaker said.
"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."
With the US market currently running at a peak level for sales — 17.55 million vehicles rolled off dealers lots in 2016, a record — carmakers have been reluctant to build new factories for fear that they will be forced to idle them in a downturn.
The makeup of the US market is also shifting. Low-profit small cars are losing out to SUVs and pickups, which deliver higher margins.
Automakers had in some cases begun moving small-car production to Mexico, but Trump's threats of a border tax on imports to the US has made that proposition politically challenging.
GM shared opened down slightly on Tuesday, at $37.