A few of the Mexican states have been hit by U.S. President Donald Trump’s drive to make American companies invest at home. And to ease that pressure and to take advantage of the potential void created by that situation, Chinese automaker Great Wall Motor Co Ltd is considering building an auto plant in two such Mexican states, reported global news agency Reuters citing sources with knowledge of the matter.
Three people familiar with the matter reportedly told Reuters that interested in building a plant in Nuevo Leon in northern Mexico or the central state of San Luis Potosi is Great Wall Motor, which describes itself as China’s largest SUV and pickup manufacturer.
While heating and air conditioning firm Carrier in December scaled back plans to move production to Nuevo Leon, Ford Motor Co in January canceled a $1.6 billion plant in 00San Luis Potosi evidently under pressure from Trump to keep jobs in the United States.
According to a source and two documents seen by Reuters, to evaluate the states’ connectivity, Great Wall Motor officials met with Mexico’s top railroad firms, Ferrocarril Mexicano (Ferromex), part of Grupo Mexico, as well as Kansas City Southern de Mexico.
The company was in direct talks with Nuevo Leon’s government, reported Reuters quoting one of the sources.
While giving no details on the issue, a U.S.-based plant is also being eyed by the automaker, said Reuters quoting another source.
The choice between U.S. and Mexican locations would depend on trade issues involving the United States, Mexico and China, reported Reuters, citing information form a senior Great Wall Motor executive, speaking on condition of anonymity.
There were no immediate comments available to Reuters’ queries from Great Wall Motor and Ferromex. While declining to provide further details, Great Wall Motor officials did meet the company, confirmed a spokesman for Kansas City Southern de Mexico.
As Trump threatens to rip up the North American Free Trade Agreement (NAFTA) and rails against U.S. firms moving jobs south, a pledge by the Chinese firm could bolster Mexico’s efforts to reduce dependence on U.S. trade and investment.
Little has traditionally been invested in Latin America’s second largest economy by China, a low-cost manufacturing rival to Mexico. But there are signs that could be changing.
Plans with a firm part-owned by Mexican tycoon Carlos Slim to invest over $200 million in a car plant in the central state of Hidalgo were unveiled in February by China’s Anhui Jianghuai Automobile (JAC Motor) and distributor Chori Company.
Construction on the Great Wall Motor plant could get underway next year and cost about $500 million according to one of the sources. The person added that seeking to use Chinese inputs and for the American and Mexican markets, the unit would produce some 250,000 autos a year.
(Adapted from Reuters)