[MEXICO CITY] Cisco Systems Inc plans to spend as much as US$4 billion in Mexico through 2018 to expand production, adding jobs in the country even as the American company cuts its global workforce by 7 per cent.
The spending will lead to the creation of 270 new Cisco jobs and 77 outside positions, according to a statement from the Mexican government Tuesday. The biggest maker of equipment that runs the internet plans to upgrade its factories and increase production through contract manufacturers, a person familiar with the matter told Bloomberg News earlier. The investment figure includes some spending that had already been planned.
The plan aids Mexican President Enrique Pena Nieto as he seeks to show his economic reforms are attracting more investment. The timing could be delicate for Cisco, coming just after the US presidential debate this week in which Republican candidate Donald Trump threatened to increase taxes on companies that move jobs to Mexico and other countries.
Cisco, based in San Jose, California, announced about 5,500 job cuts six weeks ago, without saying which countries would lose positions. Savings from the job reductions will be invested in newer businesses that Cisco expects to fuel sales growth, such as cloud computing and connected services, the company said.
Including the new hires, the spending plan will affect 4,830 Cisco employees in Mexico, the government said. The expansion enables the manufacturing in Mexico of products including routers, servers and video-conferencing screens.
The plan is one of the first major investment announcements by a US company in Mexico since April, when Ford Motor Co said it would spend US$1.6 billion on a new small-car factory in Mexico, drawing a rebuke from Mr Trump. It's one of the top five spending announcements since Mr Pena Nieto became president in 2012.
Ford has begun fighting back against Mr Trump's accusations and took to Twitter during the presidential debate to rebut the Republican candidate's assertion the company is cutting US employees to move work to Mexico.
The second-largest US carmaker tweeted it "has more hourly employees and produces more vehicles in the US than any other automaker." Earlier this month, chief executive officer Mark Fields went on CNN to say the company is "absolutely not" cutting US jobs.
In June of last year, AT&T Inc said it would invest about US$3 billion to extend mobile Internet service to Mexico in addition to spending US$4.4 billion earlier in the year to acquire Iusacell and Nextel Mexico.