GM to Import Cars Made in China

By: Associated Press
By: Associated Press

As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the U.S. have created a political problem for the automaker and the White House.
The reports, which GM will neither confirm nor deny, could mean trouble because GM is supported by $15.4 billion in U.S. government loans, largely due to the Obama administration's desire to preserve the company's 90,000 U.S. jobs.
The United Auto Workers charged last week that the Detroit automaker intends to almost double over the next five years the number of vehicles it imports to the U.S. from Mexico, South Korea, China and Japan.
"GM should not be taking taxpayers' money simply to finance the outsourcing of jobs to other countries," Alan Reuther, the union's Washington lobbyist, wrote in a letter to U.S. lawmakers.
The carmaker, which was in danger of running out of cash early this year, faces a June 1 government deadline to cut costs and complete other restructuring measures or go into Chapter 11 bankruptcy protection. It also has requested another $11.6 billion in government loans to make it through this year, and faces the prospect that the government will soon be its largest shareholder.
On Wednesday, Shanghai Securities News and other Chinese media reported that GM plans to begin exporting vehicles from China to the U.S. within two years, ramping up sales to more than 50,000 by 2014.
GM spokesman Tom Wilkinson in Detroit would not comment on the reports. The White House and Treasury Department did not immediately respond to requests for comment.
Harley Shaiken, a professor at the University of California at Berkley who specializes in labor issues, said increased overseas production and imports could prove politically tricky for GM.
"The reason is simple -- production location is a corporate decision, but when it's on the taxpayer dime, there are different sensitivities, so the notion of billions for a rescue package and offshore production, I think, could be politically combustible," he said.
Shaiken said GM needs to lower costs, which is accomplished with cheaper overseas labor. But it must also address concerns of the U.S. government, which wants to preserve American jobs.
"GM is getting funding from U.S. taxpayers to help save the company," Sen. Sherrod Brown, D-Ohio, said. "Taxpayers deserve more than Chinese imports in return. Taxpayer funds should be used to build the next generation of fuel-efficient vehicles in the U.S., not abroad. This is about creating jobs and rebuilding our economy."
GM, though, says the percentage of cars made and sold in the U.S. will remain stable.
Company documents show that American-made cars will comprise 67 percent of all vehicles sold in the country this year. The number drops slightly to 66 percent in GM's 2014 projections. Imports will amount to 33 percent this year, rising to 34 percent by 2014.
The company says the import mix could change by 2014, with fewer vehicles produced in Canada and more produced in Mexico and other countries.
"The percentage sold in the U.S. will stay constant within a percent or two," Wilkinson said. "The number of vehicles built in the U.S. will increase as the market recovers."
He reiterated that the company's goal is to build vehicles in the regions where they are sold, in part to avoid getting stung by currency fluctuations. GM, he said, builds 90 percent of vehicles sold in the U.S. in North America, and that is not expected to change.
Of the 3 million vehicles GM sold in the U.S. last year, it imported the Chevrolet Aveo and Pontiac G3 subcompacts from South Korea, the Pontiac G8 muscle car from Australia and the Saturn Astra compact from Belgium. The Saturn Vue, Chevrolet HHR small sport utility vehicles and several pickup truck models were imported from Mexico. Full-size pickup trucks, several sedans and small SUVs and the Chevrolet Camaro were brought in from Canada.
Still, the UAW generally opposes importing vehicles into the U.S. According to its figures, the percentage of GM's U.S. sales from Mexico, South Korea, Japan and China will increase from 15.5 percent now to 23.5 percent in 2014.
Reuther wrote that GM's increased imports would be equal to the output of four U.S. assembly plants, "the same number that GM plans to close."
The union currently is negotiating with GM for government-demanded labor cost cuts, including 16 plant closures. At a leadership meeting in Cleveland Wednesday, leaders were told to expect a vote on concessions before the June 1 deadline.
GM millwright Ron Bear of Belleville, Mich., who attended the meeting, said the rank-and-file would be unhappy with any more imports.
"As far as importing cars, what is that going to do for our jobs? I guess that's the question," he said.
GM would be the first company to import cars from China although automakers have brought in components in the past to save on labor costs. Most Chinese automakers have been daunted by meeting U.S. safety standards. They also face the uphill battle of winning consumer confidence for unfamiliar brands.
According to Chinese media reports, the primary exports to the U.S. would be small cars similar to the Chevrolet Spark subcompact.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, says it makes good business sense for GM to import subcompacts from China because the U.S. market for them is uncertain, but there is strong demand in China.
With gas prices around $2 per gallon most Americans will keep driving bigger cars. U.S. sales would be too small to justify the expense of building and equipping an assembly plant, he said. At the same time, exports to the U.S. would allow GM to keep its Chinese plants running at maximum capacity, which is the formula to make money, he said.
"In the short term, you're going to locate your plants where the core of the market is for that product," he said.
Cole suggested that for Obama, returning the company to viability would outweigh the drawbacks of importing some cars.
"What's more important, some jobs in a particular factory somewhere or the overall success of the company?" Cole asked. "That is really far more important."

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  • by Benjamin Location: Milton Fl on Jun 23, 2012 at 07:24 PM
    I have bought my last GM product and I'll never buy another. The govt bailed out the auto union and now you want to send the jobs overseas. No thanks GM i'll buy a non uaw non GM from now on.
  • by Nick Matyas Location: USA on May 19, 2009 at 03:45 AM
    These are challenging times for supply chain managers, logistics service and manufacturers. Manufacturers are re-examining their transportation providers and are seeking to change to carriers who are financially stable and have a track record of being able to manage in challenging and rapidly changing market conditions. There has been a very large increase in the number of Request For Proposals RFP /RFQs. Freightgate’s GTM-Trek! Global Tender Management Software supports corporate initiatives for multimodal transportation spend management and improvements in supply chain efficiency.
  • by local resident on May 15, 2009 at 02:35 AM
    I certainly hope that all of our tax dollars that were "loaned" to GM to help save them are paid back the instant they move operations to China.
  • by Eric Location: Eaton Rapids on May 14, 2009 at 08:02 PM
    I don't know what to say. Thanks UAW/Obama. I'm voting INDEPENDENT next election. Maybe then something will get done.
  • by Cindy Location: Sunfield on May 14, 2009 at 06:44 PM
    Why is everyone always blaming the GM employees for GMs problems.We don't get rich working there we make a nice living. We aren't the CEOs who make 15 million a year or get hugh retirement packages. Don't you get if we go away so do alot of other small businesses who rely on our business. I think alot of people direct their anger at the wrong people we didn't create the problem we are just trying to survive,like everyone else. Oh just so you know the people who work on the line don't make the decisions as to what goes on with company. GMs
  • by jon on May 14, 2009 at 06:34 PM
  • by Anonymous on May 14, 2009 at 01:26 PM
    It goes to show that Americans want cheap goods to pay for their lifestyle, but want to be paid top dollar for the same work they do.
  • by Bob Location: Lansing on May 14, 2009 at 11:26 AM
    he he he... Go Union! Way to save those American jobs! LOL... Can't wait to see what this does for the national mpg average. Woot woot!!! Eurotrash cars and ASIAN cars! Right on, greener future, here we come.
  • by Franklin Location: Lansing on May 14, 2009 at 08:18 AM
    If the UAW were serious about saving jobs, they would bargain to lower their4 hourly wages to compete with these foreign imports During the last 5 contract negotiations the UAW hasnt lowered their hourly wage not one dollar, they spend more time cutting supposedly future benefits and call them giving back, which makes no sense. The UAW is killing the golden goose and blaming those providing the goose.
  • by Robert Location: Jackson on May 14, 2009 at 07:01 AM
    Yet again we the people duped! By a U.S. company got to love greed that is why a car made in china with a cost of about $6900 can sell in the U.S. for $16,000 to$59,000 boy o boy I can't wait to buy one. Maybe we will wake up a take back what is ours before it's too late. Then again we believe whatever we are told too by both parties. It's time to wake up and believe its not about you it's about the company's that run our country we will soon join the 3rd world economy can't wait can you!!!!!
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