General Motors Downshifts in China and Accelerates in Mexico

General Motors is going to invest $3.6 billion in Mexico to expand and modernize its four auto manufacturing plants.

The US auto giant, it seems, is scaling down operation in China and expanding operation in Mexico.  Proximity to the United States, relatively cheap labor and free trade agreements with several important nations are the factors driving global manufacturing firms set up shop in Mexico.

Over the past two years, GM has invested $1.4 billion in bolstering its operation in Mexico. The new investment aims to upgrade and expand its plants in the states of Coahuila, Guanajuato, Mexico, and San Luis Potosí.

The auto giant says its investment will create 5,600 direct and 40,000 indirect jobs. Thanks to a slew of reform programs, Mexico has now turned out to be Latin America’s biggest car producer.

GM says it will also use its Mexican base to produce technology for the auto industry. Most of the cars GM produces in Mexico are exported. It is believed that the US firm produces an annual average of 890,000 motors, 1.2 million transmissions, and about 647,000 vehicles a year in Mexico.

At a public event held a presidential residence, Ernesto M. Hernandez, the president of General Motors’ affiliate in Latin America, praised Mexico’s recent economic reforms, saying that the country is offering an ‘attractive investment opportunity’ by improving its overall business environment.

He also said GM’s investment would lead to the creation of 40,000 additional jobs in related industries. Mexico has recently claimed that its vehicle production exceeded 3 million units between January and November 2013.