According to a Reuters report, Canada's largest auto workers union said that General Motors (GM) announced plans to cut 625 jobs at its plant in Ingersoll, Ontario and move some of the work to Mexico. Today's news comes after a January 24th meeting between President Trump and CEOs of the automakers. (See also, Auto CEOs Meet with President Trump)
Today's news is surprising because it goes against the recent trend where Ford Motor (F) and Fiat-Chrysler Automobiles (FCAU) announced plans to create jobs and bring manufacturing back to the US. It was on January 8th, that FCAU planned to invest $1 billion in the US and create 2,000 jobs. On January 3rd, Ford said it would scrap a plan to build a plant in Mexico for $1.6 billion and instead spend $700 million to hire 700 US workers.
Also, one needs to think about the Trump administration's focus on Mexico and current trade deals. There have been talks of reworking NAFTA, building a border wall and a border tax. With so much uncertainty regarding these items, it may have been wiser to wait until things become a bit more clearly outlined.
GM shares are trading down 1% today, to $37.12. We will likely get GM's view on the potential impacts some of the new tax proposals being floated around will have when the company reports earnings on February 7th. According to Zacks, analysts are currently expecting revenue of $42.20 billion and EPS of $1.13 for the quarter. For the year, analysts are estimating total 2016 revenue of $165.12 billion and EPS of $6.01.
GM will also guide for 2017 on this conference call, and investors will be paying close attention to the details around the company's outlook. Currently, analysts expect Q1'17 EPS of $1.33 on revenue of $39.78 billion. Meanwhile, for the full year, analysts are expecting revenue of $167.44 billion and EPS of $6.16.