Last Wednesday, General Motors Co had unveiled plans for the expansion of its Mexican operations, investing US$691 million into the country. The plan also included the expansion of its Toluca engine plant factory as well as the construction of a new factory located in Silao, central Mexico.

The production of the new and/or upgraded plants would include 8-speed transmissions as well as the construction of next generation transmissions for the company. The plans were confirmed by GM Mexico President Ernesto Hernandez.

There are many factors that make the investment worthwhile, such as the benefits obtainable from the many free trade agreements, a well-educated work forcce and close proximity to the US auto consumer base. Aside from these, there is increasing demand in South America, further buttressing the attraction of Mexico as its manufacturing base. It is projected that with the number of automakers seeking to build a base in Mexico, the country could soon overtake Brazil as South America's top car manufacturing country.

According to Hernandez, "The automotive sector is today one of the pillars of the national economy, representing more than 20% of manufacturubg GDP and continues to be, for many reasons, a fundamental industry in attracting investments to productive sectors of the economy." These remarks were made during a press conference announcing the expansion in Mexico City with Mexican President Enrique Pena Nieto.