MT Magazine September/October 2025

THE INTERNATIONAL ISSUE

FEATURE STORY

14

a rapidly evolving tech landscape. “For example, in June we announced $4 billion of new investment in our U.S. assembly plants to add 300,000 units of capacity for high margin light-duty pickups, full-size SUVs and crossovers. This will help us satisfy unmet customer demand, greatly reduce our tariff exposure, and capture upside opportunities as we launch new models. The capacity begins coming online in just 18 months, after which we project building more than 2 million vehicles in the U.S. each year as we scale.” The company’s approach may be just what other U.S. manufacturers need to follow to succeed in current market conditions. Let’s break that down. New Trade and Tax Policies Again, there is flux in the trade arena at the moment, so trade and tax policies still need to be worked out. However, several advantageous tax policies for manufacturing companies were signed into law that immediately benefit companies, such as 100% bonus depreciation, doubling of the Section 179 expensing cap to $2.5 million, and more. See “Major Win for U.S. Manufacturers: One Big Beautiful Bill Signed Into Law” on AMT Online for details.

$4B of New Investment Ignore that (very big) number. Most companies don’t have $4 billion to invest. And, while your company likely doesn’t have a massive footprint in another country that needs to be reshored, elements of your supply chain could require an investment to relocate to maximize efficiency. Two things are important to note about GM’s situation and consequent actions: 1. At the start of the year, Cox Automotive estimated total U.S. auto sales to be 16.3 million units for 2025; that has been lowered to 15.6 million, with 15.7 million being the baseline. Even with a declining market, GM is investing. The company announced its $4 billion investment on June 10. It could have invested less, or it could have put investing on hold entirely until there was greater clarity – but it saw the need to bolster its U.S. manufacturing footprint, and that costs money. Part of this investment will create capacity in two of its domestic plants to produce the gasoline-powered Chevrolet Equinox (Fairfax Assembly) and Chevrolet Blazer (Spring Hill Manufacturing), vehicles that are presently made at the company’s Ramos Arizpe plant in Mexico. 2. While this may seem obvious, the obvious always bears repeating: GM is focusing on its highest-margin products. This past June, in a presentation of Bank of America’s annual Car Wars analysis of the auto industry, the bank’s chief automotive analyst, John Murphy, said, “The next four-plus years will be the most uncertain and volatile time in product strategy ever. Therefore, we think that automakers must lean heavily into their core ICE product portfolios to generate the capital to fund the uncertain future.” This is precisely what GM is doing with its concentration on gasoline-powered pickups and full-size SUVs and crossovers. Another portion of the $4 billion investment will go to the Orion Assembly plant in Michigan. Initially expected to produce electric trucks, the plant will now make large, gas powered vehicles. It is worth noting that on May 27, a few weeks before announcing its $4 billion investment, GM announced another manufacturing investment: $888 million for the Tonawanda Propulsion plant in Buffalo, New York – the largest single investment GM has ever made in an engine plant. Here’s something worth noting about the Tonawanda plant: It was originally opened in 1938. By taking advantage of existing infrastructure, GM makes the most productive use of its money. This is not to say that it will use facilities that are nearly 90 years old, but that it is not going greenfield on its manufacturing operations, which can be cost effective.

Tonawanda Propulsion currently makes the fifth-generation small-block V8. The