General Motors Co. said Friday it would open a supplier park near its Arlington, Texas, sport-utility factory, resulting in the relocation of about 600 jobs from Mexico to the U.S. and a higher concentration of American-made parts in Chevrolet Suburbans and Cadillac Escalades.
The decision comes as the Trump administration considers changes to the North American Free Trade Agreement and as Republican lawmakers weigh a border-adjusted tax, both of which could make it more expensive for companies to import parts from abroad. Boosting the number of U.S.-made parts could alleviate some trade risk for GM's most-profitable vehicles, the hulking SUVs assembled at its Arlington factory.
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Analysts estimate that profit margins on the SUVs can exceed $15,000. Any tariff on the trucks' components could pinch profits.
GM is one of several manufacturers rethinking the wisdom of shipping intermediate products through far-flung supply chains. Once thought of as a strategy to lower costs, overreliance on a global parts network is perceive to be a risky bet due to political shifts, protectionist measures and even natural disasters.
The auto maker earlier this year announced plans to add about 1,500 factory jobs in the U.S. in the wake of public criticism from President Donald Trump of GM's Mexican imports.
The company said both the 1,500 jobs and the 600 supplier jobs were planned before Mr. Trump's election. The new supplier park is aimed at trimming logistical costs and benefiting from of other advantages that could result from proximity of parts to the assembly plant, GM purchasing chief Steve Kiefer said in an interview Friday.
Mr. Trump has set in motion a renegotiation of the 23-year-old North American Free Trade Agreement, which has set the ground rules for Detroit and foreign-based auto makers operating in the U.S., Canada and Mexico.
The SUVs assembled at GM's Arlington plant have among the highest Mexican content of any vehicles produced in North America, according to the National Highway Traffic Safety Administration. The SUVs contain 49% U.S.-or Canada-made components, while 38% of the parts come from Mexico, the agency says.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
June 16, 2017 13:48 ET (17:48 GMT)