GM plans to re-open the closed Toluca plant to build small engines.
General Motors will invest $691 million for its manufacturing operations in Silao, San Luis Potosi and Toluca, Mexico to build more fuel-efficient powertrains. In Latin America’s second biggest economy, the auto business accounts for 20% of all manufactured exports, with the U.S buying 80% of the output.
While GM has been operating in Mexico for 78 years, the NAFTA trade agreement made it easier for all automakers and other manufacturers to transfer jobs out of the U.S., which buys almost 80% of total Mexican exports of vehicles and auto parts. The U.S. continues to run a trade deficit under NAFTA since its 1994 inception, running a deficit of $169 billion with Mexico during 2012, as politician’s promises of U.S. jobs never materialized. The Obama Administration is attempting to put similar agreements, negotiated in secret, in place with Germany, Japan, and other Pacific countries.
GM will spend $349 million for the Silao Complex for a new transmission plant and a new generation of 8-speed transmissions, which GM badly needs as it is predominantly using older six-speed designs. The same applies for the $131 million for the San Luis Potosi Complex to expand the next-generation transmission plant.
GM also allocated $211 million to expand the Toluca Complex that was shut during the Great Recession when demand for medium duty trucks slumped. GM plans to build 1.6-liter and 1.8-liter 4-cylinder engines there.
The Silao and San Luis Potosi investments total $480 million and complete an investment of $900 million that GM Mexico announced in July 2011. Last July, GM announced the allocation of $420 million for other projects in San Luis Potosi and Silao.
(Read AutoInformed on NAFTA Trade Up in June to $83 Billion. Vehicles Post Big Gains / NAFTA created the world’s largest free trade area, which now links 450 million people producing $17 trillion worth of goods and services. The U.S. goods trade deficit with NAFTA was $94.6 billion in 2010, a 36.4% increase ($25 billion) compared to 2009. The U.S. goods trade deficit with NAFTA accounted for 26.8% of the overall U.S. goods trade deficit in 2010. )
