SOURCE: Daily Telegraph
GM plans to export cars from China to the US
General Motors is planning to build cars in China and import them into the
United States, a strategy that could trigger further job losses and union
anger in the US.
By Malcolm Moore in Shanghai
Last Updated: 11:56AM BST 14 May 2009
Reports in China claim GM will start shipping cars from Shanghai in 2011.
Photo: AFP/Getty
A plan to shift a greater proportion of the struggling car-maker's production
overseas is still being negotiated with US politicians, who have already
lent GM $15.4bn (£10.18bn) in order to keep it afloat and safeguard its
90,000 US workers.
However, a spokesman for GM in Shanghai said it was "only a matter of time"
before vehicles made in China are imported into the company's home market,
in another blow to the US car industry.
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After losing $6bn in the first quarter, GM has slashed its global production
by 40pc, or 900,000 vehicles. Around 13 assembly plants will be affected by
shutdowns in the US. The company has a June 1 deadline to complete a
restructuring or follow Chrysler into Chapter 11 bankruptcy.
"The production quality here is the same as Luton in the UK or the US. We
may not be fitting them with all the specifications but that does not mean
we can't," he added.
"In a perfect world, you produce vehicles where you sell them. That's how
it should be. But if it doesn't make sense economically to have two
factories because you do not sell enough volume then it might make sense to
have one location," he explained.
A 12-page dossier submitted to politicians in Washington suggests that the
number of cars that GM manufactures in Mexico, China and South Korea and
imported into the US will roughly double.
Currently the company imports the Chevrolet Aveo and Pontiac G3 from South
Korea and the Saturn Vue and Chevrolet HHR sport utility vehicles from
Mexico. The company could export small vehicles such as the Chevrolet Spark
from China to the US.
However, the numbers of Chinese exports to the US are likely to be small.
"I don't believe that you are going to have a situation that you produce
millions of cars in China and ship them to the US," he said. "If
you produce a vehicle here and you have 50,000 or so in extra volume you
might find another market that can sell them."
According to reports in China, GM will start shipping cars from Shanghai in
2011, with just over 17,000 being exported in the first year.
The move will be fiercely challenged by GM's unions. "GM should not be
taking taxpayer's money simply to finance the outsourcing of jobs to other
countries," said Alan Reuther, a lobbyist for the United Auto Workers
union. He added that the number of extra cars that GM plans to import will
be equal to the output of four US assembly plants, "the same number
that GM plans to close".
Although GM is struggling globally, its operations in China continue to be a
huge success. Sales in March rose by more than 50pc to 151,000 cars,
compared to 172,000 in the US. GM has invested in research and design
facilities alongside its Chinese partners and says it could design and
produce a car wholly inside China within 12 to 24 months.
The company also conceded that China could eventually become a more important
market than the US.
"We sell as many Buicks here as in the US so the question is not crazy or
unrealistic," said the spokesman. "The US market continues to
stagnate and move backwards. China will make 10.5m cars this year, an
increase of 8.7pc. The US will make 9.5m. So it will be the first time that
China builds more cars than the US, and three years ago, the US was building
17m cars a year."
