- Title: Trump assails GM over Mexico production, Ford cancels proposed Mexican plant
- Date: 3rd January 2017
- Summary: DETROIT, MICHIGAN, UNITED STATES (JANUARY 3, 2017) (REUTERS VIA SKYPE) (SOUNDBITE) (English) AUTOTRADER SENIOR ANALYST, MICHELLE KREBS, SAYING: "So, one of the things that automakers are trying to do is, in order to continue producing cars, and putting heavy discounts on them, they are trying to figure out ways how can we cut costs in terms of the way we build them? That's why they're looking at Mexico as a production site, and then putting vehicles that are more in demand, and command higher profits, in its U.S. factories."
- Embargoed: 18th January 2017 18:04
- Keywords: Donald Trump General Motors tax Chevrolet Cruze auto car borders hatchback Ford Focus electric Michelle Krebs Autotrader James Nolt World Policy Insitute
- Location: NEW YORK, NEW YORK; DETROIT, MICHIGAN; AND LORDSTOWN, OHIO, UNITED STATES / UNIDENTIFIED LOCATION / INTERNET
- City: NEW YORK, NEW YORK; DETROIT, MICHIGAN; AND LORDSTOWN, OHIO, UNITED STATES / UNIDENTIFIED LOCATION / INTERNET
- Country: USA
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA0055XJ1L53
- Aspect Ratio: 16:9
- Story Text: U.S. President-elect Donald Trump on Tuesday (January 3) blasted U.S. carmaker General Motors Co and threatened to impose a "big border tax" for making some of its Chevrolet Cruze cars in Mexico.
"General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!" Trump said in a post on Twitter.
Shares of GM fell about one percent in premarket trading after Trump's tweet. But made up the loses after the open.
Representatives for GM could not be reached immediately for comment.
In November, GM said it planned in early 2017 to lay off 2,000 employees at two U.S. auto plants, including one in Lordstown, Ohio, where it builds the compact Chevrolet Cruze. GM had planned to build the Cruze hatchback in Mexico while continuing to build the Cruze sedan in Ohio, supplier sources have said.
"It's a very niche vehicle," said Autotrader's Michelle Krebs. "It's the Chevrolet Cruze Hatchback, and they just introduced it. They already make the sedans in Lordstown, Ohio. They haven't been selling well, even though their car has gotten great reviews, and it was recently redesigned. They've recently cut back a shift there. The hatchback is a very small percentage of that. So, I don't know if it would be ultimately worth it to move it back to the U.S. I don't I don't know the dollars and cents of that equation."
The shift is part of a larger trend among Detroit's Big Three automakers to produce more small cars for the North American market in Mexico in an effort to lower labor costs, while using higher-paid U.S. workers to build more profitable trucks, sport utility vehicles and luxury cars.
James Nolt of the World Policy Institute said more companies are trying to prepare for Trump's policy changes.
"I've already read that Apple, for example, has done a contingency study to see how much it would cost if they moved manufacturing back from China to the United States," Nolt said. "Other companies are probably doing the same sort of thing. They're making contingency plans. What if Trump is really serious about this? How could it affect our costs? How could we reallocate production to be able to take advantage of this new environment? So, a lot of companies and people are assessing Trump to see whether he's serious, or whether his campaign rhetoric was hollow, and I think, increasingly, the evidence is he's serious."
Ford Motor said Tuesday (January 3) 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 Trump for its Mexican investment plans.
A Ford source said the Trump team was told this morning about the decision. It 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.
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