By Nick Bunkley at Automotive News
Mexico in 2018 accounted for more than a quarter of General Motors’ estimated North American production for the first time, a proportion that will rise further if the company follows through with plans to end production at five plants in the U.S. and Canada this year.
GM is now Mexico’s largest auto producer, topping Nissan Motor Co. in a year when it reduced output by an estimated 5 percent in the U.S. and an estimated 33 percent in Canada, according to the Automotive News Data Center. GM built 834,414 vehicles in Mexico last year, an increase of 3.6 percent, vs. a 10 percent decrease to an estimated 763,257 for Nissan, which had been No. 1.
GM’s higher Mexican output at a time when it’s eliminating jobs in the U.S. has angered President Donald Trump and other politicians as well as union officials set to negotiate a new contract with the automaker this fall.
“We want those cars here,” Rep. Debbie Dingell, a Michigan Democrat and former GM lobbyist, said in a statement to Automotive News. “That’s why we have to support a public policy environment that encourages production in the U.S.”
Overall production in Mexico fell by 1 percent in 2018. That’s the first time Mexico production has declined since automakers began opening a flurry of plants south of the U.S. border to take advantage of lower costs from nonunion labor and favorable trade agreements with overseas markets.
But production in Mexico is expected to remain stable in the coming years, particularly now that the U.S., Canada and Mexico have agreed in principle to a renegotiated free-trade agreement, said Eric Anderson, a senior analyst with IHS Markit.
Total North American production declined for a second consecutive year. Production was down an estimated 2.6 percent overall, including an estimated 2 percent in the U.S. and an estimated 8.8 percent in Canada.
Just three automakers built more vehicles in the U.S. in 2018: Tesla, up 151 percent; Volkswagen Group, up an estimated 22 percent; and Honda Motor Co., up 2.7 percent. Ford remained the largest U.S. producer, building nearly 2.4 million vehicles domestically vs. about 2.1 million for GM.
In Mexico, Toyota Motor Corp. built 49 percent more Tacoma pickups in Tijuana, and Hyundai-Kia made 33 percent more small cars in Nuevo Leon. Besides those two and GM, the only other automaker to raise output in Mexico was Fiat Chrysler Automobiles — by 369 vehicles. Honda and Ford joined Nissan with double-digit cutbacks.
A GM spokesman said the company hasn’t added any capacity in Mexico for a decade and has no plans to do so. Its 2018 gain there stemmed from falling demand for GM’s U.S.-made cars and surging popularity of crossovers such as the Mexico-made GMC Terrain and the Chevrolet Equinox, which is built in both Mexico and Canada. Production of the Equinox and Terrain in Mexico nearly doubled from 2017, but GM built 11 percent fewer pickups and 74 percent fewer cars in Mexico last year.Mexico represented an estimated 30.8 percent of GM’s 2018 light-truck production and an estimated 25.7 percent of its total output in North America. Ford got 9.7 percent of its North American supply from Mexico but doesn’t build any pickups, SUVs or crossovers there.
GM is poised for another Mexico production increase in 2019 with the addition of the Chevy Blazer, which started coming off the Equinox line at its Ramos Arizpe plant in November.
The decision to make the Blazer in Mexico — reached, company officials say, when sedan sales were higher and GM had less U.S. capacity to spare — has been a particularly sore spot for the UAW, which learned of it on the day GM reduced its Chevy Cruze plant in Lordstown, Ohio, to one daily shift. GM says it will end production in Lordstown after March 1, followed later in the year by assembly plants in Detroit and Oshawa, Ontario, and propulsion plants in Michigan and Maryland. Unifor, the Canadian union that represents Oshawa workers, last week blocked access to the headquarters of GM Canada in protest of the potential plant closure.
“GM now top producer in Mexico as industry output declines” was originally published at Automotive News on 1/29/19.
By Pete Evans
After six consecutive months of record output, Mexico now makes more than one out of every five cars built in North America, new numbers from automotive organization Ward’s shows.
Mexico built 1,926,930 cars in the first half of 2017, almost 16 per cent more than the country cranked out in the first six months of last year. That compares with 1,208,911 Canadian-built vehicles over the same period, a figure which dipped by 2.4 per cent from last year’s level.
The boom means Mexico now makes more cars than the U.S. does, as America built 1,697,551 cars in the first half of 2017. Compared to last year, that figure is down by 17 per cent — about what Mexico’s output has expanded by.
Mexico may now be making more cars than America does, but when larger vehicles such as trucks, vans and SUVs are included, America still leads the region in vehicle production, with 5,812,310 through June — although that figure is down almost five per cent in the past year.
Profit margins on those vehicles tend to be higher, which is why North American automakers build them closer to home, while outsourcing smaller vehicles that aren’t selling as well as they used to.
Last month, Ford announced plans to produce all of its Focuses at a new plant in China, the first time the company will build cars in that country that are destined for sale in North America. Previously, the plan was to build the Focus in Mexico, before changing that plan after pressure from the White House.
And General Motors in January announced it would be cutting 625 jobs at one of its Ontario facilities and moving production to Mexico instead.
U.S. President Donald Trump has vowed to energize American manufacturing in his presidency, and the subject of auto jobs is likely to come up in NAFTA discussions between the three nations slated to start later this summer.
While Trump has rallied support for the Made In America movement, the reality of the North American automotive supply chain makes that basically impossible to achieve, since companies build and assemble hundreds of different components in various countries along the way toward building a single vehicle.
Roughly 40 per cent of the components in a vehicle considered to be made in Mexico in fact come from the U.S., the non-partisan think tank the Center for Automotive Research (CAR) said in a report earlier this year. In Canada, the ratio is about 25 per cent.
A hard-line approach requiring that all cars sold in America be fully made and assembled in America would cost the U.S. about 30,000 jobs, and add thousands of dollars to the price of a vehicle, CAR said.
The “Made in Mexico” label has become more plentiful on American car lots this year, even as auto makers pressured by President Donald Trump kicked off the year with promises to create more jobs in the U.S.
A move by auto makers to produce some popular sport-utility models in Mexican factories helped spur a 16% increase in production of light vehicles in Mexico during the first six months of the year compared with the same period in 2016. At the same time, tepid sales of sedans held down production in the U.S. and Canada, according to new data posted by WardsAuto.com.
The data indicates one in five cars built in the North American Free Trade Agreement zone comes from Mexico, including hot new products from General Motors Co. and Fiat Chrysler Automobiles NV. That is up from the industry’s reliance on Mexico during the financial crisis, when the U.S. car business received billions of dollars in bailouts aimed at preserving jobs and keeping domestic players afloat.
Mr. Trump launched several attacks on Mexican car imports throughout his campaign and after his election, saying more auto-factory jobs should remain in the U.S. Since then, auto makers have committed to several initiatives, including a move by Ford Motor Co. to scrap a new assembly plant being built in Mexico and invest some of the money saved in a Michigan factory that will add jobs. GM and Fiat Chrysler have said they intend to invest billions of dollars to add jobs in factories in coming years, citing favorable policies related to tax reform and other issues as reason for optimism.
The Trump administration in August will kick off new talks with Canada and Mexico on an overhaul to Nafta. The vehicle-manufacturing business — including a sprawling supply base — is a central negotiation point.
The latest data from WardsAuto shows that U.S. light-vehicle manufacturing fell 5% during the first six months of this year from a year earlier, as auto makers shed workers or scheduled significant downtime to counter a slowdown in demand for sedans. A substantial chunk of America’s automotive manufacturing footprint is devoted to production of family cars or compact cars, which aren’t faring well as gasoline prices remain low and sport-utility vehicles grow in popularity.
Separate U.S. trade data shows that the value of light-vehicle imports from Mexico to the U.S. ballooned 40% through May.
United Auto Workers President Dennis Williams told reporters last week that the union is planning to launch a “Made in America” campaign later this year, an effort to support hundreds of thousands of members building vehicles or parts in U.S. factories. Mr. Williams is looking to follow the Trump administration’s focus on American-made products and will use the effort to educate consumers on how to know if a car is built in America.
Finding those cars is getting harder.
Pickups such as some versions of FCA’s Ram and Chevrolet Silverado, two of the best-selling vehicles in America, are built in Mexico.
GM and Chrysler this year also started producing small crossover SUVs in Mexican plants; these are considered important vehicles for U.S. dealerships because of their growing popularity as consumers shift away from passenger cars.
GM shifted some production of a revamped version of its popular Chevrolet Equinox crossover SUV to Mexico from plants in U.S. and Canada. Over the next few years, the largest U.S. auto maker is expected to add other new models to factories south of the border.
Most of Fiat Chrysler’s increase comes from a decision to shift North American manufacturing of the Jeep Compass from the U.S. to Mexico. An all-new version of that small SUV is being built at FCA’s plant in Toluca, Mexico, which has seen year-to-date production increase 177%, according to WardsAuto.
Meanwhile output at FCA’s factory in Belvidere, Illinois is down nearly 93% year to date, as production of the older Compass model has ended and two new models of the Jeep Patriot and Dodge Dart were canceled. That plant has been retooled for production of a new Jeep Cherokee midsize SUV, which just began in June after being shifted from a Toledo facility.
- Ford is investing in a new plant in Mexico’s San Luis Potosi State to produce more small cars
- The $1.6 billion USD investment will create 2,800 additional direct jobs by 2020
- Construction begins this summer, with new small cars expected to start rolling off the line in 2018
MEXICO CITY, April 5, 2016 – Further increasing its competitiveness, Ford is investing in a new small car plant in Mexico, building a new manufacturing site in San Luis Potosi State.
Ford is investing $1.6 billion USD in the facility, which begins construction this summer. The new plant will create 2,800 additional direct jobs by 2020.
Specific vehicles being produced at the new facility will be announced later.
This investment comes during Ford’s 91st year in Mexico, including manufacturing vehicles since 1925. Ford and its 116 dealers this year also are celebrating 50 years of strong educational programs, including the construction and maintenance of nearly 200 rural schools throughout the country.
Mexico is Ford’s fourth largest vehicle manufacturing site for global customers – behind the U.S., China and Germany. Vehicles produced in Mexico also serve customers in the U.S., Canada, China, Argentina, Bolivia, Brazil, Colombia, Chile, Paraguay, Peru, Uruguay and South Korea.
The investment is part of the company’s One Ford global product and manufacturing plan. During the past five years, Ford has invested more than $10.2 billion in Ford facilities alone in the U.S. In addition, Ford has invested $2.7 billion in facilities and supplier tooling in Spain, $2.4 billion in Germany and – with the company’s partners – $4.8 billion in China.All of these investments are part of the company’s plan to serve global markets and deliver profitable growth.