GM's $2 Billion Expansion: Sign US Auto Makers Are Back

GM Headquarters
GM Headquarters

This is one of those days the US auto industry should savor.

Just two years after being bailed out by the US government, General Motors is announcing today that it will spend $2 billion to add approximately 4,200 jobs at 18 plants ineight states.

This follows a horrific decade of closing dozens of plants and slashing hundreds of thousands of jobs.

The investment is a welcome shot in the arm for US manufacturing. But this is about more than just adding jobs. It's about re-tooling to make GM more competitive.

Some of the money will go into next generation power trains built in plants like the GM facility in Toledo, Ohio. Some of it will go into GM final assembly plants in Arlington, Texas, Kansas City, Kansas and elsewhere. You get the point, GM is gearing up for the next generation of cars and trucks.

This will inevitably lead to questions about whether GM is leading a renaissance in the US auto industry. After all, Ford and Chrysler have also announced they are adding thousands jobs and sinking hundreds of millions of dollars into their plants. Renaissance might be a bit strong.

But make no mistake: the Big Three are taking the next step in a revival for Detroit that should continue for the foreseeable future.

GM, Ford and Chrysler are all profitable and expect to stay profitable. And they are putting out perhaps the best cars and trucks they've ever built. Their quality, styling and fuel economy are all improving. That will keep buyers coming back to the showroom and give Detroit's automakers the momentum to grow their business.

Will GM, Ford, and Chrysler ever get back to the point where they were in the late '90's where they employed more than 400,000 workers in the US?

No. Back then there were too many plants building too many cars and trucks for too few buyers. Today, the industry has right sized itself at approximately 170,000 workers and even as it grows in the next 3-4 years it's only expected to employ just over 200,000.

But after all that's happened in the last decade, Detroit (and the US) will take it.

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