Volkswagen committed to Mexico, but workers worry

BMW executive on Mexico plant: We're still committed to U.S. production
BMW executive on Mexico plant: We're still committed to U.S. production

President-elect Donald Trump's threats against car companies in Mexico aren't spooking Volkswagen -- yet.

The automaker is ramping up production of its Tiguan SUV in Mexico, a decision the company made two years ago. This year, it plans to make 130,000 new SUVs out of its Puebla facility in Mexico.

Last week, Trump threatened to slap a "big border tax" on Toyota and GM for producing cars in Mexico and selling them in America. He also applauded Ford for canceling plans for a new plant in Mexico and instead invest and hire in after Trump had lambasted Ford during his campaign.

Volkswagen leaders in Mexico aren't blinking yet.

"We have to wait and see," says Thomas Karig, VW's director of corporate relations. "When we have more precise proposals on the table [from Trump], then we can talk about the impact."

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Related: Trump threatens GM to Make in U.S. or pay tax

It's a big bet: This move aims to drive down the price tag of the Tiguan in the United States, where the SUV market is booming. Volkswagen launched the new Tiguan on Monday at the Detroit Auto Show.

This Volkswagen factory produces cars for other parts of the world, but exports roughly half of its cars to the United States. Opened in 1967, the sprawling 740-acre plant in the state of Puebla has grown into VW's largest outside of Germany. The factory also produces others cars, including the Golf, the Beetle (which are now made exclusively in Mexico) and the Jetta.

Karig talks proudly about the high level of automation at the plant, where state of the art technology attaches the vehicle's body and chassis. This factory alone employs 14,000 workers, or the vast majority of the company's 14,600 employees in Mexico. By comparison, Volkswagen employs 7,000 in the United States.

An estimated 40,000 more people work for VW's suppliers, making the factory a powerhouse for the local economy.

mexico volkswagen factory 2

Related: Ford cancels Mexico plant. Will create 700 U.S. jobs instead

In the nearby town of Cuautlancingo, Trump's threats resonate. Besides tariffs, the president-elect has threatened to make Mexico pay for a wall on the border and to withdraw from NAFTA, the free trade deal between the U.S., Mexico and Canada. Residents aren't afraid of speaking out about how they feel about Trump.

"He's a man who is arrogant and racist," says Francisco Sanchez, who worked in the factory for 28 years before recently retiring.

Workers at the factory are worried too. Daniel, who requested his last name not be published, has worked for VW for 18 years.

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Related: GM, Chrysler have more workers in Mexico than Ford

"There's uncertainty and fear," he says, on his way out of the factory at the end of his shift. "But we will have to wait and see what he does."

Anybody who follows the Mexican car production business knows that there's much to fear from Trump's threats. Bill Rinna, senior manager at researcher LMC Automotive, worries about the threat of 35% tariffs.

"It is pretty clear now that all automakers with investments planned for Mexico are on watch," says Rinna, senior manager of North American Forecasts at LMC Automotive.

Amid all the uncertainty, Volkswagen is pressing on with no plans to shift jobs or production to the United States.

Karig emphasized that it's business as usual and that Trump hasn't triggered any changes at Volkswagen.

"No." he says firmly. "Nothing."

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