General Motors confirms plans to invest $1.4 billion in its Texas large SUV assembly plant, an ambitious upgrade aimed at retaining the automaker’s dominance of the profitable segment and perhaps winning favor with the UAW as negotiations on a new 4-year labor contract begin.
“This super-sized investment reflects GM’s commitment to our SUV customers who expect nothing but the absolute best from us and their vehicles,” Cathy Clegg, vice president-Manufacturing and Labor Relations, GM North America, says in a statement.
The investment brings GM’s recent expenditures at the 60-year-old Arlington facility to $2 billion. Earlier outlays paved the way for last year’s launch of the redesigned Chevrolet Tahoe and Suburban, GMC Yukon and Yukon XL and the Cadillac Escalade, as well as a new stamping operation.
The latest investment will finance a new paint shop, body shop and general assembly area upgrades aimed at making the facility a more competitive producer. The enhancements are not meant to expand production capacity at the facility, GM’s only maker of the big SUVs.
The improvements begin this summer and will take three years, GM says, and will not affect output schedules at the plant presently running three shifts five days a week with Saturday overtime.
The facility cannot afford downtime, either. GM sold 224,056 Arlington-built SUVs last year, up 15.3%, according to WardsAuto data. So far this year, sales are down 3.5% to 96,919, but GM executives blame the falloff entirely on production constraints.
The large SUVs also are the automaker’s most profitable products, earning a reported average of $10,000 on every unit sold. GM dominates the segment, too, with a whopping 73.9% market share.
The timing of the investment also may curry favor with the UAW, which has made job security a leading bargaining point in the talks under way.
GM has announced $4.5 billion of U.S. manufacturing plant investment this year and the automaker plans to reveal another $900 million outlay somewhere in the U.S. before year’s end.