GM CEO faces harsh criticism over Mexico investments

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General Motors Chief Executive Mary Barra came under harsh criticism from members of Congress from Michigan on Thursday for building a new vehicle in Mexico while ending production at five North American assembly plants and cutting nearly 15,000 jobs.

On the second day of meetings on Capitol Hill, Barra faced a tough session with supportive lawmakers from the state where GM is based and has thousands of workers.

Senator Gary Peters, a Michigan Democrat, questioned why GM was launching production of its new Chevrolet Blazer SUV in Mexico as it was cutting production in the United States and said the company needs to move the vehicle to the United States.

“We did get answers as to some of the decisions that they made. But I think they need to revisit that thought process and understand the importance of making (vehicles) locally,” Peters said. “The reason you have excess capacity in the United States is because you've built capacity in Mexico.”

General Motors CEO, Mary Barra / VCG Photo

In 2014, GM announced it was investing five billion U.S. dollars in Mexico through 2018 to modernize and expand its manufacturing facilities there. GM says that since 2009 it has invested 22 billion U.S. dollars in United States facilities.

Representative Sander Levin, a Michigan Democrat, said GM pays less than three U.S. dollars an hour at four plants in Mexico, a fraction of what it pays in the United States.

“It's been very profitable to leave the United States and go to Mexico,” Levin said of GM's expanded production of trucks and SUVs in Mexico.

Lawmakers were angered by the lack of notice before GM's job cut announcement last week and wanted assurances that GM would not be closing additional U.S. plants.

Barra told reporters after the meetings it was “important for General Motors to make necessary but incredibly difficult changes.”

GM is ending production at its Detroit-Hamtramck Assembly plant next year, as well as at its Warren Transmission plant in suburban Detroit, along with plants in Ohio, Maryland and Canada and eliminating about 8,000 salaried positions.

Barra said the decision to build the Blazer in Mexico, which was announced in June, “was made many years ago.”

She told Reuters on Wednesday it would be “very costly” to reverse course because the new SUV was launching in days. She also noted GM is launching a number of new vehicles in Michigan next year.

Asked if any more U.S. facilities were at risk of closing, Barra said GM “looked at what steps we needed to take to strengthen the company... We think the steps we've taken are what's necessary for our future.”

Representative Tim Walberg, a Michigan Republican, said lawmakers were caught off guard by the job cuts and expressed their anger, but added, “nothing was thrown.”

Representative Brenda Lawrence, who represents Detroit, said lawmakers were putting GM on notice about future production decisions, noting the company is making strong profits and got a massive taxpayer bailout a decade ago.

“We are watching the decisions they are making,” Lawrence said.

Source(s): Reuters