GM to make multi-billion investment in US plants

Article by Andrew Christian, on May 4, 2015

General Motors will make multibillion-dollar investments over many years in a few manufacturing plants in the U.S. as part of its strategy to increase production and quality, an insider told Reuters. GM intends to make capital investments in factories and equipment, which includes stamping plants and body shops.

It’s expected that jobs will be created as a result of these investments however, there are no details yet on just how many will benefit. The automaker is making this move amid preparations to negotiate this fall with UAW on a new master contract that affects about 50,000 of its U.S. hourly workers.

UAW officials have been asking the Detroit-based automakers to invest in plants that are represented by the union. For 2015, GM has a $9 billion budget for global capital spending. This is considerably higher than the $7 billion budget last year to spend on model launches and technology investments.

In past years, GM has spent around two-thirds of its capital in North America. Officials have said that there won’t be any changes related to this. According to the insider, GM will not reveal the locations of the U.S. plants that will get the new investments.

However, it’s likely to include the Pontiac plant where the announcement is set to be made. This plant stamps the metal components that will be used for 20 different models. GM is seriously considering investing $1.3 billion in its huge SUV factory in Arlington, Texas – a move that will create 589 more jobs.

It’s believed that Arlington city officials will be approving the project. The automaker has admitted that it is studying a plan to invest in the Texas plant to make upgrades but it hasn’t confirmed if a decision has been made.

GM officials have been open about their intention to resolve the bottlenecks at the plant in Texas that have delayed the output of very profitable big SUVs such as the Cadillac Escalade. In order to cope with demand, majority of GM truck plants have been operating at or almost full capacity.

Automakers have been cautious about increasing the output capacity in North America and possibly undoing the gains in pricing power that they’ve accomplished since having had to make difficult cuts during the economic crisis.

Instead, GM and its competitors have been pushing to raise output at plants that currently have additional shifts, overtime, and investments to boost efficiency.

“General Motors is investing in Michigan – and Michiganders,” Gov. Rick Snyder said. “Our state’s automotive heritage and expertise is known around the globe, and GM and its workforce are a major part of that. We’re going to continue to ensure the best environment for GM, the auto industry and all other industries to grow and thrive, creating more and better jobs. That includes connecting and developing the talent to keep the economic engine running at full speed long into our state’s bright future.” [source: GM]

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