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Gm Shifting Jobs to Mexico from Canada

Essay by   •  February 8, 2019  •  Case Study  •  548 Words (3 Pages)  •  32 Views

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Date:         February 16th, 2018
To:         XXX
From:         XXX
Subject: A Summary of GM shifting jobs to Mexico – From Canada by Chris Isidore

Introduction

In the article, GM shifting jobs to Mexico – From Canada by Chris Isidore. Isidore talks about how GM is moving its production of its GMC Terrain vehicle from Ingersoll, Ontario plant to Mexico which will result in 625 jobs lost in Canada as a result of the company’s greed on profits and taking advantage of the cheaper labor that is available in Mexico. He continues to show that the employees in Canada feel mistreated and will fight alongside their union to arrive at a solution. Furthermore, he states this outsourcing is made possible through NAFTA which he quotes the CAMI facility saying it should be re-negotiated. (Isidore, 2017)

Impact on Canada

The decision to cut 625 jobs from the Ingersoll plant in Ontario will lead to an increase in unemployment rate and decrease in final goods manufactured in Canada therefore decreasing the countries overall GDP which may cause the Canadian economy to drift towards a recession which In turn may cause interest rates to decrease which would ultimately decrease the value of our dollar which may make our Canadian market more attractive to foreign investors but less attractive to Canadian investors. From an macro-economic standpoint ultimately this is not desirable as the automotive industry is known to be Canadas largest manufacturing sector which accounts for 12% of manufacturing GDP and 2% total industrial GDP (Association, 2017)

Relevance to Global Business Environment

This article is a classic example of how companies follow their bottom line very closely and do all they can to increase it with one example covered in chapter 6 being the Business Process Outsourcing where these companies will import services from a lower cost company (such as Mexico) to pay less for the same product. (FITTskills, 2013)

This Outsourcing to Mexico is made very cost efficient to GM due to something called NAFTA as seen in Chapter 2 which shows us that in 1994 Canada signed what is called a North American Free Trade Agreement that connects the United States and Mexico in agreement that eliminates most tariffs on trade between these nations making trade in either direction far more profitable for the company. Without NAFTA; outsourcing would not be worth the savings as when the finished product is completed it would be subject to taxes that would cost the company more money than simply producing it in Canada.

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