GM to Source More in China

[Truckin]

GM to buy more high-value car parts in China.

Reuters
November 30, 2007 -- 06:30 CET

BEIJING (Reuters)-- General Motors Corp expects to buy more, increasingly sophisticated car components in China, the firm's fastest-growing procurement market, as the country's auto parts industry clambers up the quality ladder.

GM, one of the world's top two auto makers, will increase its procurement spending in China by 25 percent a year in the period 2005-2010, a senior executive said today.

Bo Andersson, group vice president in charge of GM's global purchasing and supplier chain, declined to give a dollar total for the plastics, electronics parts, aluminium wheels and other components that GM buys in China.

Andersson said the local industry was increasingly producing higher value-added parts that GM now procures elsewhere.

GM, which buys 20 million parts a month from 190 Chinese suppliers, had experienced no quality problems over the past year, he told a news briefing.

"You will see a shift into air conditioning and also chassis parts, steering parts and brake parts," he said.

Andersson said 90 percent of the materials and parts in a locally manufactured GM car are sourced in China -- 60 percent of them from multinational firms and 40 percent from Chinese rivals.

He cited Dicastal Wheel Manufacturing Co Ltd, which after just a few years as a GM supplier now provides half of all the aluminum wheels that GM uses globally.

GM is reducing costs after losing more than $12 billion in the past two years. It is in the midst of a sweeping restructuring that includes cutting more than 34,000 jobs and closing 12 plants in North America.

[70plyRR]

Reducing costs makes since. Unions have killed the suppliers in this country. What would you do?

[Truckin]

I would source there if indeed the quality and logistical networks are set up as Bo claims they are. Only challenge (which GM will overcome) is engineering changes made to supplied parts when it takes 4 weeks on a container ship to get them to the U.S. Just have to carefully manage inventory, what's on the water, and get the designs correct prior to launch. This will hurt Mexico and Canada more than it will the U.S. suppliers.

[Hondata]

I think its a shame. Just like buying a tool. It is like buying a GM product. MADE IN CHINA!. Oh dear, it is all going to be made in China. Everyone wants to cut cost, and save money. Cut the throats of your American production worker. Is it their fault? Maybe, and maybe the unions. Well when its all done in the end, there wont be a America left. This country was made on industry. And will die with the lack of.
The rich will servive, and who cares about the rest right?

[Hondata]

Ben B wrote:

<quoted text>
VERY much like buying a tool. You either buy a set of 6 craftsman american-made wrenches for $40, or you buy the chinese ones made with the same steel for $10. If youre not hard on tools constantly, which do you choose?
Its either buy the chinese products or pay a premium price for the american label. Personally, I buy american as much as I can. If Honda and Toyota had the unions they would be right there with GM in China.

Maybe I am wrong, but I thought that is why Honda and Toyota invested here in the U.S. Knowing that people in the U.S. would buy more if they helped build their product. The way they offset it was by not having unions. Anyway I can relate to the tool thing.

[Bernard]

I have owned many many cars. I gotta say there are four of them that stand out in my mind as great cars. My 85 Dodge Ramcharger, 77 Ford F-100, 75 Ford Econoline, 95 Suzuki Swift. Out of the three, the 77 Ford was the best, requiring the least amount of maintenace. Had over 260,000 miles on it when the trans blew, didn’t burn any oil, had been used hard most of it’s life as a farm truck. I was rocking the poor truck back and forth trying to get it out of the snow, I guess the old trans couldn’t take it. Well now, how did these automotive workers take out their frustration, by not giving two sh*ts about their jobs and the cars. At this time foreign car companies did not have the same problems, there were no pissed off striking workers in Japan or Germany. So these cars benefited from not being sabetoged on the assembly line. So this planted the seed that Foreign cars were better built, but something happened. By the late eighties things were on the up and up, build quality between foreign and domestic were about the same, yet the same old attitude was there. Somehow people never got over the Vegas, Pintos, and Pacers. Up here in Wisconsin there are not too many Hondas over 4 years old that don’t already start having rust over the rear wheel wells. Fact is asian car bodies don’t hold up, they rust out. Out west, and down south sure, they last okay. Up here, forget about it, domestic cars hands down have better quality bodies. That whole thing about foreign cars getting great mileage, all a bunch of crap. Any one actually take the time to see what the EPA rated mileage is on anything. About the same. Everyone here spouts off a bunch of crap without any research, look for yourself. Everyone says how great Honda and Toyota is for America, giving American jobs. Lets think about this, why did Toyota and Honda put factories in the Deep South. Any one want to guess? Hmmmmm well the south traditionally lags behind in wages with the rest of the country, unions are weak, so why do Hondas and Toyotas cost thousands more? They don’t have any legacy cost, they don’t have decent pension plans to pay for. I guess everyone has America figured out, while Japan safeguards their own industry by putting heavy tariffs on imported goods, especially cars, we let em all in. Why not, this is America, home of brainwashed corperate citizens. We buy chinese products and since China purposely devalues the yaun we can’t compete. We make everyone else strong by convincing our selves we make crap. Cars are cars, people over time have convinced themselves that anything foreign has some sort of mythical quality attached to it, this has driven up resale value. Not because it is any better, but because people operate under foreign is better mindset. I love the guy spouting off about his mazda, guess what pal, the same engine that is in the Mazda is also used in Fords. Guess what, Volvo uses a Ford designed V-8, Toyota used a ancient GM designed inline six cylinder for years and years in their FJ, Izuzu trucks are based on Chevy designs, Rover used a old 60’s era Buick designed v-8 till the 90s, Mazdas by and large are based on Ford engines and chassis, Saabs use GM designed engines and bodies, Mistubishi trucks are nothing more than Dodges with different fenders. Hmmmmm wierd eh, why would all these foreigners use such crappy American engineered engines, and platforms. Geez why doesn’t anyone in this forum actually look into any facts before spouting off a bunch of nonsense. Like it or not, there is alot more American engineering in your foreign vehicles than you would like to admit to.

[Hondata]

Well Bernard, I have to respect you for what sound like you are. I understand your feelings of the car industry. I too have owned some great domestic cars. A 1967 F100 352 V8 was one that I liked the most. Had the wood in the floor of the bed and had metal thick enough to hammer a nail straight if you had to. Those days are gone. And because of that things change, maybe not for the better, but we have to do with what we got.And as for the Honda and Toyotas those cars were rough when they started importing them. I remember I wouldn't own one and hated to see someone buy one. When things for me started to change was in the mid 90's. I had some problems with a Lincoln, major engine problems at 38k. Ford would not do anything to help. I had a few Mustangs and a Ranger all at the same time. I bought my first Toyota Camry and I have to say it was as good of car as that $42k dollar Mark Vlll I bought. That drove me to switch. I owned several Toyotas and traded the Lincoln in on a Tacoma X-cab. I had that truck for 6 years and had only a park light blow. I had trouble with Toyotas too. like all cars the troubles will start. Some just more often than others. I now have Hondas. Reason? Great MPG and super reliability. I can work on them. I do things to them. I have a Odyssey and my family loves it. The dog too. I have a few CRX's one is my toy , my hobby sort of. I like all cars. I drove a P71's for several years driving and flying thousands of miles and driving under stressful conditions. Now my area has switched to Chargers. And I feel so good to get back into my Hondas when im not working. Like I have said before, its like a pair of Nikes Vs boots on a 100m dash.
Honda and Toyota are in the U.S. for a reason. To sell cars. The unions are the killer for domestics. The same people who build 5 million Camrys are the same type people that build the Malibu. One group that gets paid more which falls onto the buyer. And the big CEO gets a big vacation outside of the U.S.A. Its a global economy, and the money goes to stock holders and money is invested hear. Honda and Toyota just like Ford and G.M.
Look at G.M. they are buying more and more parts from China. And will be making cars in China only to bring them over hear. Why? Hard to compete with 9 year old kids and no health care.
If what I said is wrong than I have read wrong. I am sure things happen on both sides. I just know that Toyota and Honda put food on tables here in America just like the others. If you don't think so, just drive to Buffalo WV. or Marysville Oh. and ask.
Remember these are my views and mine alone. I respect yours and feel you have a right to them as your life is different than mine. In all I liked hearing your story and feel you have a very good point in your words. Have a great weekend....

[70plyRR]

Ben B wrote:

<quoted text>
Yes, that is why. Now had the unions come into play, they would be in the same boat as gm and ford, and would probably have already headed to china or back to japan to manufacture their cars at competitive prices.

True, auto makers look at the bottom line. Do we want more factories in NA - of course.

This industry is so competitive, it then becomes a “do or die” situation.