GM’s $691 Million Investment: It’s all About Central Mexico

Commentary by Doug Donahue

Just last week, as has been covered widely in both the mainstream and trade press, GM is expanding its manufacturing footprint in Mexico. As reported by Reuters and others, GM’s expansion includes a new factory in Silao to produce 8-speed transmissions, an upgrade to an existing factory in San Luis Potosi that will make next-generation transmissions and an unannounced expansion of its Toluca engine plant.

That’s nearly $700 million of new investment from one of the world’s leading auto manufacturers, and it’s all going into central Mexico, arguably the hottest destination in the world right now for manufacture of goods to be exported into North and South America.

Central Mexico is Key – for Manufacturers and Suppliers Alike

Like Nissan and Toyota before them, GM is eager to leverage the benefits of central Mexico, which include a cost-effective labor force, solid infrastructure, proximity to both North and South America and a rapidly expanding supplier base.

With all this growth clustered in central Mexico, it’s abundantly clear that the supplier network will only continue to grow, and the opportunities for first- and second-tier suppliers – both large and small – are numerous. GM’s big play in the area only serves to reinforce that notion.

Some more about GM in Mexico:
• The company has been operating in Mexico for 78 years and has the second-greatest vehicle output in Mexico, behind Nissan
• The $480 million newly announced to be spent at Silao and San Luis Potosi is part of $900 million GM in July 2011 committed to spend in Mexico.
• $211 million will be spent on the expansion of Toluca, where GM builds V8 and four-cylinder engines.

 

Source: Reuters

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