Goodyear Prepares to Invest $550 Million in Mexican Plant.

In a ceremony with Mexican President Enrique Pena Nieto, Goodyear Chairman and CEO Richard Kramer announced the company’s decision to invest $550 million to build a new plant in the central Mexican state of San Luis Potosi.

The new plant, according to official Goodyear sources, will begin production in 2017 and employ 1,000 workers. It will have the capacity to produce six million tires per year.

Kramer said that the new plant “is an important investment in Goodyear’s future” and that it “will be a strong complement to our existing plants in North America and Latin America.” Kramer also stressed how the new plant will be committed to green methods to limit the plant’s impact on the environment, something welcomed by Australian tire company, Tyreright.

As wages in China and East Asia have risen, companies have begun to look at Mexico as an additional source of cheap labor. The country is also attractive due to its free-trade deals with the United States.

As a result, Mexico is now the fourth-largest global automobile exporter after Germany, South Korea, and Japan. Toyota announced last month that it would invest $1 billion to open a new Corolla plant in the central Mexican state of Guanajuato. BMW is also prepared to invest $550 million in San Luis Potosi.

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The state of San Luis Potosi is particularly suited to take advantage of the new corporate interest in Mexico. Goodyear itself noted that it selected the region after careful consideration.

Kramer noted that San Luis Potosi’s “central geographic location will enable us to support our valued customers and consumers throughout North America, Mexico and Latin America.”

However, consent for this plan is not unanimous. The United Steelworkers (USW) called the move disappointing and USW President Leo Gerard criticized trade policies which “drive our companies to produce outside the United States with Wall Street reaping the benefits.”

Recent American support for free trade has been called into question as Barack Obama struggles with Congressional approval for the Trans-Pacific Partnership. But a new tire plant could present new opportunities for both Goodyear and a rising Mexican automobile industry.

Khurram Aziz is a freelance writer based out of London, England.