Despite the posturing of U.S. auto giants, the Trump administration is likely to lead to higher input costs, which could moderate the demand of SUVs, which is currently on a high, due to higher prices.
According to a person who has been briefed on the matter, following recent volleys from U.S. President-elect Donald Trump, General Motors Co is set to announce its plans to invest nearly $1 billion in its U.S. factories.
However, the source insisted that the country’s largest auto manufacturer will be taking the decision purely on business principles rather than political ones.
The sources preferred the cover of anonymity since the deliberations are on-going and are thus confidential.
The investment is likely to help GM retain more than 1,000 jobs in the U.S. while it scours for more opportunities to add engineers to its payroll, said the source.
According to Craig Glidden, GM’s General Counsel, although the timing of the announcement synched with Trump’s coming to office, the company’s investment decision was planned earlier.
When asked to respond to requests for comments, GM declined comment.
Since the beginning of 2017, GM had come under increasingly heavy fire for its plan to build vehicles in Mexico rather than in the U.S., presumably because of labour costs.
On January 3, Trump had threatened to impose a “big border tax” on the automaker for its Chevrolet Cruze compact cars that are manufactured in Mexico.
The threat seems to have worked: at a news conference last week, Trump had stated that “General Motors will be following, and I think they will be” in reference to investment made by U.S. auto manufacturers.
In the campaign trail, Trump had said he would bring manufacturing jobs back to the U.S.
Yesterday, in an interview with a German newspaper, Trump threatened to impose a border tax of 35% on German carmakers who import their vehicles to the U.S.
Earlier this month, he fired a salvo at Toyota Motor Corp for its plan to relocate its production of the Corolla from Canada to Mexico.
Although automakers have of late been touting their American investments, however they have maintained that it is not in respond to Trump.
Case in point: earlier this month, Ford Motors Co announced that it would be cancelling its planned $1.6 billion plant in Mexico and instead it would be investing $700 million at its plant in Michigan.
Last week, Toyota stated that it would invest $10 billion in the U.S. over a span of five years.
Fiat Chrysler said it would invest $1 billion in two of its plants in the U.S. Midwest so as to modernize them and in the process create 2,000 jobs.
Despite these posturing, GM is after a business concern. It will be making planned job cuts at three of its manufacturing plants in the U.S.
In November, GM stated it would cut nearly 2,000 jobs by ending the third shift at its plant in Lordstown, Ohio and Lansing, Michigan.
In December, it further stated it planned on cancelling the second shift of around 1,300 workers from its assembly plant in Hamtramck, Detroit, in March this year.