GM in China

[Jeffrey S.]

This article appeared in this morning's Detroit Free Press.

http://www.freep.com/article/20130420/BUSINESS01/304200090/GM-to-open-4-new-assembly-plants-in-China

So let me get this straight. The American people bailed out GM (which I was and still am very much in favor of) and after all of the loans have been paid back (which they have been) and the shares sold by the Treasury, there will still be a short fall of billions of dollars, and after swearing before Congress that no jobs would ever be sent to China, and after severe cuts taken by both salaried and hourly employees, the thanks we get is the opening of new plants in China and exporting vehicles back to the US. Opening all these plants in China and selling the cars there and in other far eastern markets is a good thing. But taking American jobs and shipping back to the US is unforgivable. I live in Detroit and am ecstatic that the domestic three are doing well and believe strongly that we should all buy American whenever we can, but this news, if true is disgraceful. Sorry, I had to vent.
Jeff

[Don L.]

Re: GM in China

Hi Jeff. Don't get me started.

I recall approx 6 years ago, I had bid on (I think it was) a $52.5 million/year supply contract for interior parts. I'll talk about this now because I am not working with that company any longer. We were underbid by less than $200,000 and lost to a Chinese competitor without a discussion. BTW, fgt from China to N. America was not considered, so the net gap was actually less than $200k.

I couldn't understand it at the time, however, I see how GM is looking to grow their market share in China, so I wonder if providing jobs in China is a way to market GM in China .

In my opinion, suppliers did not get enough consideration in the US Gov't bail out. Not sure if I blame the OEMs or the US Gov't.

[Dick W.]

Re: GM in China

Love it or hate it, we live in a global economy. China is a huge market that the US big three hope to capture market share. The people there have the same wants and needs that we do.

[Kenneth B.]

Re: GM in China

Love it or hate it, we live in a global economy. China is a huge market that the US big three hope to capture market share. The people there have the same wants and needs that we do.

Also GM sells more cars in China than they do here.

[Edward S.]

Re: GM in China

Does anyone know how much money did China donate to bail GM out? Why did we sell the last stocks back at a loss when GM stock is doing nicely, was the stock needed to provide for a large bonus program?

[Paul J.]

Re: GM in China

I understand what you're saying guys, but I believe that China is the fastest growing automotive market in the world. Don't forget about the Japanese and European car companies that have built facilities here and employ mostly American workers. GM will benefit by having production facilities in China. We've seen that labor costs and taxes are the key costs to any company, and over the years companies went from the northeastern US to the south, then to Mexico and now China. I've seen some manufacturing come back to the U.S. (I worked with three companies last year). Production costs in China have been slowly rising, and some day these companies may come back, although it will be a long time.

One more thing, GM, Ford, and Chrysler have all sold vehicles in the U.S. that were manufactured in Japan, Australia, and Europe.

[Don L.]

Re: GM in China

I understand what you're saying guys, but I believe that China is the fastest growing automotive market in the world. Don't forget about the Japanese and European car companies that have built facilities here and employ mostly American workers. GM will benefit by having production facilities in China. We've seen that labor costs and taxes are the key costs to any company, and over the years companies went from the northeastern US to the south, then to Mexico and now China. I've seen some manufacturing come back to the U.S. (I worked with three companies last year). Production costs in China have been slowly rising, and some day these companies may come back, although it will be a long time.

One more thing, GM, Ford, and Chrysler have all sold vehicles in the U.S. that were manufactured in Japan, Australia, and Europe.

I don't want to deviate from the technical subjects on this TBD, however, I also can't let some points go without the following for consideration:

1. "China is the fastest growing automotive market in the world." - there are numerous markets that are grossly out-pacing N. America. India and Brazil are also hot beds. GM, Ford and even Fiat/Chrysler are doing well in these markets. I don't recall any of these markets giving financial support in the troubled times. It's also an interesting dynamic to see the differences between US and say, Chinese tariffs on imported vehicles.
2. It's very true that Japanese, European and Korean OEMs are all building automobiles on N. American soil. They are using N. American labor and paying N. American taxes for sure. Where do the profits go? Also, it should be noted that there is, in many cases more North American component content in a Japanese/Korean/European vehicle that's built in N. America than a typical N. American OEM vehicle built here.
3. GM will indeed benefit by having assembly plants in China. So will other N. American OEMs. Reference my earlier point on this
4. Production costs continue to rise in China and other "off shore" counties too. I am optimistic that we will see some work return once foreign governments slow/stop the subsidies that make competition so "difficult" and when parts sold are "to spec". Note: I often encounter off shore competition that offers a piece price that's less than the raw material COST in my price - no labor, no overhead, no margin.

Lastly, I recall the talk at the time of the bail outs, and how important the need to provide aid to GM and Chrysler so that the "industry" could be saved. It was pointed out how there were XX indirect jobs for every OEM job saved and to lose these would be to throw the nation's economy into the dumper. Today, the N. American auto supply industry is a shadow of what it was in 2008. What happened to the plan that was sold to the American taxpayers?

I've been in the component supply game for a very long time. It's a much different world today than it was in years past. I hope it will be different in the near future than it is today.

Done. Sorry for this rant. I wish I could say it makes me feel better...

[Jeffrey S.]

Re: GM in China

I think you're all missing the point. I said that the fact that GM is building plants in China and Russia to sell in these markets is a good thing. Today GM sells more cars in China than in the US and the best selling car in the world is the Ford Focus, thanks to sales in China. Expanding their business is what is needed. What I don't like is that they said that they will ship these cars back to the US. That's the shameful part.
Jeff

[Don L.]

Re: GM in China

I get your point and agree with you, Jeff. My posts are to point out how, when considering the indirect support groups that are included in the automotive industry, it's an even tougher pill to swallow. The outsourcing of the component industry on the backs of US taxpayers eclipses the cars themselves.

[Jeffrey S.]

Re: GM in China

Don,
Your points are well taken. You posted at the same time I did and I didn't see that until now. Many companies are indeed moving production back from Asia for the reasons you sited as well as the long delay and large shipments required to bring parts here. If a part is out of spec or otherwise needs modification it requires a 2 month lag and the shipment of large quantities. The work ethic and quality is also a consideration but this is all well documented. My son is living in Taiwan after a 3 year stint in Shanghai with a well known tech giant (it starts with "G") and he reports that this is an everyday concern. I know this is not "tech" related but there are many threads that are somewhat off topic but deal with automotive related issues.
Jeff

[Paul J.]

Re: GM in China

Don,
Your points are well taken. You posted at the same time I did and I didn't see that until now. Many companies are indeed moving production back from Asia for the reasons you sited as well as the long delay and large shipments required to bring parts here. If a part is out of spec or otherwise needs modification it requires a 2 month lag and the shipment of large quantities. The work ethic and quality is also a consideration but this is all well documented. My son is living in Taiwan after a 3 year stint in Shanghai with a well known tech giant (it starts with "G") and he reports that this is an everyday concern. I know this is not "tech" related but there are many threads that are somewhat off topic but deal with automotive related issues.
Jeff

Who cited?

[Domenic T.]

Re: GM in China

Gosh,
I had GM stock and a large suppliers stock before GM went broke and lost all invested in both.
I understood the bail out would creat jobs here but then saw a vidio in Comunist china with GM CEO's shaking hands with the NEW GM.
Some how I missed the point of the bail out.

DOM

[John H.]

Re: GM in China

What I don't like is that they said that they will ship these cars back to the US. That's the shameful part.
Jeff

Jeff -

I think you'll find that the number of cars shipped from China to the U.S. is way on the outer fringes of their plan, if at all; any such number would be statistically insignificant compared to the build-in-China/sell-in-China volumes that justify the facility investments.

[Don H.]

Re: GM in China

I am not very smart or an economist. Also I hate to defend the Chi-Coms but since they buy so much of our debt, could you not argue that they did indeed help bail out GM? Don H.

[Dick W.]

Re: GM in China

This article makes the case for GM's China manufacturing plants, almost 3,000,000 vehicles a year. http://bit.ly/ZKmXEO