SORRY UAW: US Automakers Go to Mexico for Electric Vehicle Manufacturing
Posted on 05/01/2021
General Motors (GM), the largest U.S. automaker, decided to have its fifth plant to build its 2023 electric vehicles in Mexico where labor is cheaper and regulations are less cumbersome. General Motors plans to invest more than US$ 1 billion at its manufacturing complex in Ramos Arizpe, Coahuila, Mexico. This is for a new paint shop and innovative technology that will start operations in June 2021. GM will build batteries and electrical components at Ramos Arizpe starting later in 2021. GM sold 2.55 million vehicles in the United States in 2020, but only about 20,000 were EVs, including the Chevy Bolt hatchback. GM thinks it can sell all of its cars with zero emissions by 2035. GMs other EV plants are in: Spring Hill, Tennessee; Factory ZERO in Detroit and Hamtramck, Orion Assembly in Orion Township, and CAMI in Ingersoll, Ontario, Canada.
The United Auto Workers (UAW) criticized the move for GM to build this massive factory in Ramos Arizpe. In a statement by UAW President Terry Dittes, “At a time when General Motors is asking for a significant investment by the U.S. government in subsidizing electric vehicles, this is a slap in the face for not only UAW members and their families but also for US taxpayers and the American workforce.”
Earlier in 2021, SWFI reported that Ford Motor Company plans to move a major project slated for 2023 from Northeast Ohio to a plant in Mexico. Ford decided to build its new electric vehicles in Mexico where labor is far cheaper than the U.S. The Mustang Mach-E is produced in Cuautitlan, Mexico. There are currently two additional electric models planned for the Cuautitlan plant, with rumors including two EV crossovers – one Ford and one Lincoln.
Shareholders of GM appear to approve of GM’s moves as the share price of GM is far past its pre-COVID range. Norway Government Pension Fund Global is the largest sovereign wealth fund investor in GM, followed by the Korea Investment Corporation (KIC).
GM Begs for EV Subsidiaries, While Shifting Production ex-USA
U.S. automakers are signaling big moves into electric vehicle production. In March 2021, General Motors President Mark Reuss said the U.S. government should extend new investment tax credits for electric vehicle manufacturing and supply chains. He also called for government incentives to expand consumer incentives to electric vehicle purchases.
Biden Throws Out Trump’s America-First Nationalist Economic Agenda
The U.S. is taking a more internationalist stance on jobs and investments, a shift from the deeply nationalist tones of Donald Trump. Trump’s “America First” programs are being dismantled by U.S. President Joe Biden through a variety of measures which included getting the U.S. back in the Paris climate agreement, killing the Keystone XL pipeline, and supporting corporations that expand production in other countries. The U.S. government also subsidizes electric vehicles through a variety of channels.
Auto Bailouts of 2008
The U.S. government’s US$ 80.7 billion bailout of the American auto industry lasted between December 2008 and December 2014. The U.S. Treasury Department lent money and purchased stock ownership in GM and Chrysler. The bailout for GM was US$ 51 billion, in which the U.S. taxpayer lost US$ 11.3 billion (bailout ended on December 9, 2013 for GM). Ford Credit received its bailout from the Term Asset-Backed Securities Loan Facility, not TARP.
GM CEO Pay Goes Up
General Motors CEO Mary Barra banked more than US$ 23 million in total compensation for 2020, about US$ 2 million more than she did in 2019. Barra’s pay as 201 times more than the median pay for GM’s global employees of US$ 117,566, including an increase in employee pension value of US$ 45,884.
