"Under Restructuring, GM To Build More Cars Overseas"

Discussion in 'General Motoring' started by mike, May 9, 2009.

  1. mike

    mike Guest

    Chrysler is next?


    Under Restructuring, GM To Build More Cars Overseas

    By Peter Whoriskey
    Washington Post Staff Writer
    Friday, May 8, 2009

    The U.S. government is pouring billions into General Motors in hopes
    of reviving the domestic economy, but when the automaker completes its
    restructuring plan, many of the company's new jobs will be filled by
    workers overseas.

    According to an outline the company has been sharing privately with
    Washington legislators, the number of cars that GM sells in the United
    States and builds in Mexico, China and South Korea will roughly

    The proportion of GM cars sold domestically and manufactured in those
    low-wage countries will rise from 15 percent to 23 percent over the
    next five years, according to the figures contained in a 12-page
    presentation offered to lawmakers in response to their questions about
    overseas production.

    As a result, the long-simmering argument over U.S. manufacturers
    expanding production overseas -- normally arising between unions and
    private companies -- is about to engage the Obama administration.

    Essentially in control of the company, the president's autos task
    force faces an awkward choice: It can either require General Motors to
    keep more jobs at home, potentially raising labor costs at a company
    already beset with financial woes, or it can risk political fury by
    allowing the automaker to expand operations at lower-cost
    manufacturing locations.

    "It's an almost impossible dilemma," said former labor secretary
    Robert B. Reich, now a professor at the University of California-
    Berkeley. "GM is a global company -- so for that matter is AIG and the
    biggest Wall Street banks. That means that bailing them out doesn't
    necessarily redound to the benefit of the U.S. or American workers.

    "More significantly, it raises fundamental questions about the purpose
    of bailing out these big companies. If GM is going to do more of its
    production overseas, then why exactly are we saving GM?"

    The administration has aroused similar complaints by shepherding a
    merger between Chrysler and Italian automaker Fiat. But it has
    extracted a promise from Fiat that it will build small cars in the
    United States.

    The complaints about GM's operations portend a potentially larger
    argument, a political dispute led in part by the United Auto Workers.

    "The bottom line is GM would rather pay $2 an hour -- and it's a
    slippery slope downward," said Alan Reuther, the UAW's legislative
    director. "If GM is going to be getting government assistance, they
    ought to be maintaining their manufacturing footprint in the U.S.
    rather than going off to China, Mexico and South Korea."

    Labor costs in those countries are far lower. While paying a U.S.
    autoworker with benefits costs about $54 an hour, a South Korean
    worker earns about $22 an hour, a Mexican worker earns less than $10
    an hour and some Chinese workers can earn as little as $3 an hour,
    industry sources said.

    On Tuesday and Wednesday, GM chief executive Fritz Henderson met with
    legislators and sought to ease their concerns over the overseas

    He emphasized that the company, which is shuttering factories at home,
    is also canceling projects in Mexico, Russia and India.

    He also assured legislators that none of the figures are final, and
    that negotiations with the union are ongoing.

    "We continue to work closely with GM, UAW, and all the stakeholders to
    further refine and develop GM's plan," a Treasury spokesman said.

    The U.S. government has loaned GM $15.4 billion. But billions more are
    expected to be invested, and under the current plan, it will be the
    majority owner of the company.

    The company forecasts that between 2010 and 2014, as the recession
    recedes, its U.S. sales will rise from 2.4 million to 3.1 million.

    Most of that growth -- about two-thirds of it -- will occur in the
    United States. But about one-third of that growth will come from other
    countries, mostly Mexico and South Korea.

    Those proportions roughly reflect how GM builds the cars it sells in
    the United States today -- about two-thirds come from the United
    States and one-third from other countries.

    According to the figures shared with lawmakers, the percentage of GM's
    U.S. sales of cars built in the United States dips from 67 percent in
    2009 to 61 percent in 2012. Yet the company projects that by 2014 the
    percentage will rebound to 66 percent.

    Under the viability plan, "the U.S. percentage stays roughly the
    same," Henderson said in an interview last week.

    But the union and some legislators object that the company's U.S.-
    funded revival should not help pay for expanding foreign operations.
    Moreover, they believe that planned cuts in Canadian production --
    down 23 percent -- will have direct effects on U.S. jobs because the
    U.S. and Canadian auto industries are so intertwined.

    "If you are shutting down plants in this country, U.S. tax dollars
    should not go for building plants in other countries," said Sen.
    Sherrod Brown (D-Ohio), who was among those who met with Henderson.

    But company officials and industry analysts have long argued that,
    even putting aside the issue of labor costs, it makes logistical sense
    to build some cars in other countries, even if they are destined for
    sale in the United States.

    Take, for example, the Chevrolet Spark, a tiny car that GM sells in
    South Korea and elsewhere in Asia. In the next few years, the company
    plans to send some of those cars -- which are built in Changwon -- to
    the United States for sale.

    But since only about 5 percent of the car's market will be in the
    United States, the manufacturing will remain in South Korea.

    Analysts who study the auto companies and their global operation warn
    against allowing political passions to obstruct GM's efficiency.

    "If we start making political decisions with the auto industry, we're
    going to be in tremendous trouble," said Michael Robinet, vice
    president of global vehicle forecasts at CSM Worldwide.
    mike, May 9, 2009
  2. mike

    Bill Putney Guest

    This is fun to watch.

    Wait until they push cap and trade thru. You want to see jobs go flying
    overseas? That will do it.

    This is what is known as a liberal dilemma. To be a good liberal (and
    not be threatened to be ruined by the White House), you have to want to
    sacrifice everything for union strength *and* at the same time be for
    cap and trade, which (based on a totally artificial premise to begin
    with) is designed specifically to, on a massive and global scale, drive
    jobs overseas and transfer wealth from the haves to the have-nots.

    So to stay in the good graces of their protectors in the White House,
    the union leaders are having to publicly speak out for cap and trade and
    convince their workers that cap and trade is a good thing. And the
    workers don't even realize that it will destroy their jobs. Such is the
    price of obedience to bankrupt principles.

    I've got my proverbial bag of popcorn ready.

    The sad thing is that the powers that be will be determined to keep the
    U.S. automakers afloat (in order to preserve union jobs) using taxpayer
    money (still to be printed and paid back by us and our progeny as far as
    the eye can see) in the form of hyper-inflation.

    So at the same time they will be passing legislation (cap and trade) to
    make it even more impossible for the automakers to succeed in a would-be
    free market (which it isn't anymore), they will also be dumping ever
    more money into them to keep them in business - tens and hundreds of
    billions of dollars at a time. What a waste because it will never be a
    net gain.

    We're now learning that tens of billions that taxpayers already provided
    as "loans" to the automakers have now been written off as "not ever
    going to be paid back".

    "Liberals stand on their heads and tell everyone else the world is
    upside down" - Jim Quinn

    "Liberalism always accomplishes the opposite of the stated intent" - Jim

    "Liberals want for everybody to be equal, and they're not happy until
    everyone is equally miserable" - Rush Limbaugh

    "Never let a serious crisis go to waste" - Rom Emanuel
    Bill Putney, May 9, 2009
Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.
Similar Threads
There are no similar threads yet.