China Eyes Plant in Mexico as a New Capital of the Automotive Industries - Fact Check: Trump's Misleading Claims

By AUTO INDUSTRY ANALYSIS. Car & Automobile Manufacturing in the US Market. Updated at 2017-04-05 07:31:58 +0000


China Eyes Plant in Mexico as a New Capital of the Automotive Industries - Fact Check: Trump's Misleading Claims.

MEXICO CITY/BEIJING — Trump has criticized carmakers including General Motors for shifting production south of the border. Under threats of punitive import duties, Ford Motor Co in January canceled a $2.6 billion plant in San Luis Potosi, while heating and air conditioning firm Carrier in December scaled back plans to move production to Nuevo Leon.

Now Chinese automaker Great Wall Motor Co Ltd is considering building an auto plant in two Mexican states, sources said.

Great Wall Motor, which describes itself as China's largest SUV and pickup manufacturer, is interested in building a plant in Nuevo Leon in northern Mexico or the central state of San Luis Potosi, three people familiar with the matter said.

Great Wall Motor officials met with Mexico's top railroad firms, Ferrocarril Mexicano, part of Grupo Mexico, as well as Kansas City Southern de Mexico, to evaluate the states' connectivity, according to a source and two documents seen by Reuters.

One of the sources said the company was in direct talks with Nuevo Leon's government.

Another source said the automaker was also eyeing a U.S.-based plant but gave no further detail on locations.

A senior Great Wall Motor executive, speaking on condition of anonymity, said the choice between U.S. and Mexican locations would depend on trade issues involving the United States, Mexico and China.

Great Wall Motor and Ferromex did not immediately respond to requests for comment. A spokesman for Kansas City Southern de Mexico confirmed Great Wall Motor officials met the company, but declined to provide further details.

A pledge by the Chinese firm could bolster Mexico's efforts to reduce dependence on U.S. trade and investment as Trump threatens to rip up the North American Free Trade Agreement NAFTA and rails against U.S. firms moving jobs south.

China, a low-cost manufacturing rival to Mexico, has traditionally invested little in Latin America's second largest economy. But there are signs that could be changing.

In February, China's Anhui Jianghuai Automobile (JAC Motor) and distributor Chori Company unveiled plans with a firm part-owned by Mexican tycoon Carlos Slim to invest over $200 million in a car plant in the central state of Hidalgo.

According to one of the sources, construction on the Great Wall Motor plant could get underway next year and cost about $500 million. It would produce some 250,000 autos a year for the American and Mexican markets and seek to use Chinese inputs, the person added.

Fact Check: Trump's Misleading Claims

Here's where the industry stands on key issues involving the Trump administration:

Statement: Ford cancelled a $2.6 billion plant in Mexico to make the Focus compact and brought the work back to America.

Reality: Ford cancelled plans to build a new assembly plant in Mexico. Bad news for Mexico, but not necessarily good news for the United States.

The move, however, didn't prevent the moving of production of the Focus compact car from Michigan to Mexico. Ford just won't go to a new plant there.

Instead, Focus will be built at a plant that the Ford opened in 1986 during the Reagan administration, seven years before the North American Free Trade Agreement was passed.

Statement: Moving Focus production to Mexico would have cost American jobs.

Reality: The Wayne assembly plant in suburban Michigan that built the Focus and other small cars is converting to build the midsize Ranger pickup and Bronco SUV.

The plant’s workers will be idle during the changeover, but their jobs should be more secure when they start making the trucks, which are likely to be more popular and profitable than small cars.

The Ranger goes on sale next year, the Bronco in 2019.

Statement: Detractors have charged that the U.S. doesn’t export enough vehicles and we’re losers in the global market.

Reality: U.S auto exports hit a record 2.7 million in 2016, says John McElroy of TV’s Autoline. America ships vehicles to 150 countries around the world.

Wards Auto reports our largest trading partners are Canada: 969,000; China, 266,000; Mexico, 225,000; and Germany, 176,000.

American-based companies build millions more vehicles around the world, the great majority of which they sell in the markets where they build them.

Statement: GM should build the Chevrolet Cruze hatchback in the U.S., not Mexico

Reality: There probably wouldn’t be a Cruze hatchback if GM had to build it in the United States. The Cruze hatch is the poster child for why interconnected global manufacturing footprints make automakers stronger.

Chevy sold about 184,300 Cruze sedans in America last year – all built in Lordstown, Ohio. It brought 4,500 hatchbacks in from Mexico.

GM wouldn’t have invested millions of dollars for that few vehicles at its plant in Lordstown, Ohio, but it makes sense to build them in Mexico, where that body style is popular and they sell well.Without Mexican production, the 4,500 Americans who bought Cruze hatchbacks might be lost to other car brands.

Statement: Germany should buy more American cars

Reality: Germans already buy hundreds of thousands of cars GM and Ford make in Germany.

The automakers have struggled for years to get their European arms back in the black, an effort that won’t be helped by German Vice Chancellor Sigmar Gabriel's tart response that Americans should “build better cars.”

By Alexandra Alper and Norihiko Shirouzu | REUTERS and USA Today.

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