Donald Trump attacks GM over Chevy Cruze production in Mexico

Threat of ‘big border tax’ comes as Ford cancels plans for $1.6bn Mexico plant and adds jobs in Michigan

GM chief executive Mary Barra: will be among business leaders giving Donald Trump  advice on the economy. Photograph: Rebecca Cook/Reuters

GM chief executive Mary Barra: will be among business leaders giving Donald Trump advice on the economy. Photograph: Rebecca Cook/Reuters

 

US president-elect Donald Trump has criticised General Motors (GM) for building a version of the Chevrolet Cruze compact in Mexico, saying the largest US car maker should build the car at home or face a hefty tariff.

His comments came as rival Ford said Tuesday it will cancel a planned $1.6 billion factory in Mexico and will invest $700 million at a Michigan factory, after it had come under harsh criticism from Mr Trump for its Mexican investment plans.

“General Motors is sending Mexican made model of Chevy Cruze to US car dealers-tax free across border,” Mr Trump tweeted on Tuesday. “Make in U.S.A. or pay big border tax!”

GM said it made its Cruze sedan in the United States and that all of those sold in the US are made in a plant in Ohio. “GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the US,” it said in a statement posed on its website without giving numbers.

The shift is part of a larger trend among Detroit’s “Big Three” car makers to produce more small cars for the North American market in Mexico in an effort to lower labour costs, while using higher-paid US workers to build more profitable trucks, sport utility vehicles and luxury cars.

In November, GM said it planned to lay off 2,000 employees at two US plants in early 2017, including the one in Ohio. US small car sales have been hit by lagging consumer demand and low fuel prices. GM’s US Cruze sales are down 18 per cent.

Interventionist

Ford, the second largest US car manufacturer, said Tuesday it would build new electric, hybrid and autonomous vehicles at its Michigan plant.

Chief executive Mark Fields on Tuesday said the decision to cancel the new plant in Mexico was in part related to the need to “fully utilise capacity at existing facilities” amid declining sales of small and medium sized cars such as the Focus and Fusion.

He also used the occasion to endorse “pro growth” tax and regulatory policies advocated by Trump and the Republican led Congress. Trump repeatedly said during the election campaign that if elected he would not allow Ford to open the new plant in Mexico and would slap hefty tariffs taxes on imported Ford vehicles.

Ford chairman Bill Ford jnr said he spoke to Donald Trump Tuesday morning to tell him of the decision to invest in the US and cancel the Mexican plant.

A Ford source said the decision was influenced by Trump’s policy goals such as lowering taxes and regulations but there were no negotiations between Ford and the Republican over the decision to cancel the Mexico plant or invest in Michigan, the source said.

Mr Fields said Ford will build a battery electric SUV with a 300-mile driving range at the Flat Rock, Michigan plant by 2020, and will launch production there by 2021 of a fully autonomous vehicle without a steering wheel or a brake pedal for use in ride services fleets.

Ford will add 700 jobs at the Michigan plant in Flat Rock, Mr Fields said, to cheers from union workers gathered at the factory for the announcement.

Ford in April announced it would invest $1.6 billion to build a new plant in San Luis Potosi, Mexico to build small cars. The company said Wednesday it will shift production from Michigan of its Focus to an existing plant in Hermosillo, Mexico.

The president-elect’s threats against Mexican-built vehicles have the potential to affect the nine global car makers, including Toyota Motor and Nissan that have announced more than $24 billion in Mexico investments since 2010. Volkswagen’s Audi, BMW and Daimler each build or plan to assemble luxury vehicles, engines or heavy trucks in the country.

The Trump transition team has said GM chief executive Mary Barra will be among the panel of business leaders giving him strategic advice on the economy and job creation after he takes office.

– Bloomberg / Reuters