General Motors announced new plans to ramp up massive investments in their operations in Mexico. This includes expansion of current factories and the construction of new ones.
The investment would total $691 billion as GM seeks to modernize their production plants, reports Reuters. This was the first announcement of the expansion of its Toluca plant, where engines are manufactured.
A new factory in the central Mexican city of Silao is at the core of GM's Mexico plans. There the new factory will make next-generation eight-speed transmissions.
The announcement came from GM Mexico President Ernesto Hernandez on Wednesday, at a press conference in Mexico City with President Enrique Pena Nieto.
The Detroit-based automaker had previously announced plans for expanding their production in the United States with an $1.5 billion investment.
This is included, along with the Mexican investments, as part of GM's plans for an $8 billion investment in worldwide operations this year.
GM Mexico President Hernandez remarked that “the automotive sector is today one of the pillars of [Mexican] national economy, representing more than 20 percent of manufacturing GDP and … a fundamental industry in attracting investments” for the Mexican economy.
15,000 people are employed in GM's four complexes in Mexico. The expansion is expected to add thousands more.
Sources at Business Insider say a variety of factors are behind GM's expansion in their Mexico productions.
Between a cheap labor force, liberal free trade agreements, proximity to a large automotive market in the United States, and increased demand in South America in general, the announcement is not a surprise.
General Motor's expansion in Mexico is also part of that nation's economy, currently on the rise. Some analysts have said it is quite possible that the Mexican economy could surpass even Brazil's, which has become a juggernaut in recent times.