Mahindra & Mahindra Ltd., an Indian auto and tractor maker, plans to build rugged off-road vehicles at a small factory north of Detroit, a potential step toward the company's bigger goal of selling cars in the U.S.
The move, announced Monday, is expected to result in more than 100 new production jobs and provides the latest example of a foreign auto company deepening its U.S. roots. Auto sales have boomed in recent years, leading companies as big as Toyota Motor Corp. or as unknown as Chinese windshield maker Fuyao Glass Industry Group, to commit billions in new investment at a time when domestic players are tempering growth.
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Mahindra has a large presence in the U.S. tractor market but is unknown to most car buyers. Its rugged utility vehicles sell mostly in emerging markets and its other auto brands, including South Korea's Ssanyong Motor, don't sell to American consumers. In an interview, Chairman Anand Mahindra said the company is considering several ways to expand in the U.S., including electric cars or Ssanyong imports from South Korea.
The off-road vehicle to be built in Auburn Hills, Mich., isn't aimed at the more-than-17-million people who buy light trucks or cars annually. Instead, the rugged utility vehicle will be limited to 45 miles an hour and compete in a segment catering to people needing an off-roader for tasks on private property or roadways not heavily used by passenger vehicles.
Still, the small factory win for Michigan at a time when Ford Motor Co. and General Motors Co. are cutting back on certain parts of the workforce and trimming production at plants that build slow-selling sedans or compact cars. State officials have courted non-U.S. companies to fortify a local car industry considered the automotive capital of the world.
American manufacturing, meanwhile, has picked up pace over the last 12 months thanks to steady global economic growth, a rise in energy and other commodity prices, and increased business confidence. U.S. manufacturers have added 156,000 workers since Donald Trump was elected president in November 2016, according to government data.
Mr. Mahindra said the company is "very happy that (manufacturing) is going to be supported strongly," by potential tax policy changes and other policy positions, but he said Mr. Trump's election "has nothing to do with our decision...I've been talking up the U.S. for a longtime."
Mahindra & Mahindra first started investing in Michigan a few years ago, locating dozens of engineers in suburban Detroit. Other foreign-backed companies, including China-owned Nexteer, have been growing in the state.
"We're serious about courting Asian investment, global investment in Michigan," Tracie Tillinger, a business-attraction official with the Michigan Economic Development Corp., said Monday. State officials are using a combination of customized incentives and existing legislation to lure firms searching for engineering or manufacturing space.
Michigan has remained a hub for automotive engineering and development, but its role in U.S. car manufacturing has faded in recent years. Detroit's so-called Big 3, including Fiat Chrysler Automobiles NV, now produce only half the cars and trucks built in the U.S. -- most of the new auto factories built in America since the 1980s belong to foreign car companies locating in the South.
Numbers provided by the Organization for International Investment indicate foreign-owned companies have had a disproportionate role in the auto industry's rebound from the financial crisis. The organization says 411,000 people work in the auto industry and are employed by foreign firms, representing nearly half of the sector's employment, according to the Bureau of Labor Statistics.
The current number of auto-industry employees working for foreign firms is up 43% compared with 2010, meaning non-U.S. companies have provided a substantial portion of the total growth in the sector during the decade.
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(END) Dow Jones Newswires
November 20, 2017 11:32 ET (16:32 GMT)