According to NASDAQ, “CEO Mary Barra said General Motors will invest $2.8 billion in Brazil over the next five years. Speaking to reporters in Brasilia after meeting President Dilma Rousseff, Barra said the new investment will [be] spent on new products, technology and maintaining plants. She said there were some mid-term challenges ahead, but that GM was committed to one of its most important markets.”
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The investment was not taken lightly, according to economists. While China continues to be an asset for GM, Russian turmoil has sparked concerns regarding expansion. The United States will remain the company’s main business focus; however, this latest move proves GM is looking to explore emerging markets, as well.
A report by The Wall Street Journal states, “Brazil, meanwhile, is the anchor of a Latin American operation that has delivered highs and lows in recent years. GM posted an $81 million loss in the region for the second quarter amid soft economic conditions, reflecting struggles experienced by a range of competitors including Volkswagen AG, Fiat SpA, Ford Motor Co. and PSA Peugeot Citroën.”
The hefty financial guarantee ensures the company will spend the long-term building new technologies and products within the otherwise inhibited Brazilian economy.
Auto manufacturing is an expanding part of the Brazilian economy. One-fifth of the company’s exports come from vehicle production. Despite this, layoffs have been rampant — over 16 percent of overall auto plant employees — including metalworkers — have been cut in the last seven months.
The latest move could help secure more jobs for Brazilian autoworkers.
However, Reuters notes: “Despite tax breaks, automakers are reducing payrolls in one of the world’s largest car markets as demand for new vehicles tumbles. Germany’s Volkswagen AG put 900 workers in Brazil on paid leave in May and France’s PSA Peugeot Citroen SA started a voluntary leave program for workers in Rio de Janeiro state that same month.” [/show_to]