May 13, 11:59 PM EDT
Chinese imports could bring GM political troubles
DETROIT (AP) -- 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.
"GM is reviewing various options," GM's China office said in a written statement received Thursday. "We are not discussing details of our future portfolio, beyond what we have disclosed in auto shows and our viability plans."
But the report reiterated the company's emphasis on first meeting demand in the Chinese domestic market.
"GM's philosophy has always been to build where we sell, and we continue to believe that is the best strategy for long-term success, both from a product development and business planning standpoint," it said.
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."
---
Associated Press writers Ken Thomas and Jim Kuhnhenn in Washington, Thomas J. Sheeran in Cleveland, Dan Strumpf in New York and Elaine Kurtenbach in Shanghai contributed to this report.
© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.
Click here for copyright permissions!
Copyright 2008 Associated Press
Article Tools:
Text Size:
More from the Associated Press
Michigan
More auto cuts: GM will eliminate 1,100 US dealers
More Michigan budget cuts planned for 2009-10
Mich. woman will face murder trial in 4 deaths
Michigan schedules 6 furlough days for this summer
33 Detroit Public Schools principals to lose jobs
Nation
Poll: More Americans calling themselves pro-life
Ex-Marine did not father dead colleague's child
VA doc: Other possible equipment errors reported
No evidence of abuse in Fla. reform school deaths
CDC seeing more regular flu cases now
Minn. judge rules teen must see cancer doctor
Crusading NY health chief picked to head CDC
Fla. Haitians mourn 9 migrants who died at sea
Schwarzenegger's legacy at stake in Calif. vote
3 fired, 2 resign after Fla. prisons shock kids
World
Sri Lankan prez: War to be finished in 48 hours
Pope ends Holy Land pilgrimage with call for peace
Syria: Israeli government not a good peace partner
Pakistan readies assault on Taliban in Swat town
European scientists launch new space telescope
Scared Somalis running out of food as battles rage
US predicts 50 percent spike in Afghan IEDs
Algerian Guantanamo detainee arrives in France
Intl community irate over Suu Kyi's legal plight
Egypt wants Obama to speak from historic mosque
Business
More auto cuts: GM will eliminate 1,100 US dealers
Prices hold steady as industrial production dips
Judge blocks 'robo-calls' selling car warranties
Berkshire invests in Wells Fargo, US Bancorp, J&J
Figures on government spending and debt
Sports
Former Oklahoma great Tisdale dies at 44
Ramirez apologizes to teammates for suspension
Former NFL star Bruce Smith faces DUI charge
Phelps back in familiar spot _ top of medal stand
White Sox OF Dye appeals fine, suspension
Report: Favre talked healing strategy with doctor
NFL salary cap up $12 million over last season
NASCAR won't reveal substance in Mayfield test
Nadal, Federer Djokovic reach Madrid semifinals
Colts president discusses shuffling of assistants
Entertainment
Rapper T.I. coming to Arkansas _ for prison term
Lionel Richie, Cyndi Lauper among 'Idol' acts
New Kids hangin' tough with fans on 3-day cruise
Shields upset by media glare in Sutherland case
Dickinson can't wait to pounce on `Hills' villain
No charges after man accused of firing at 'Dog'
Parton expanding her childhood literacy program
Scorsese hits Cannes with plan for restored films
Iranian, Chinese directors defy bans for Cannes
Cannes entry `Bright Star' offers ode to Keats
More AP headlines, multimedia
U.S.
World
Business
Personal Finance
Technology
Sports
Entertainment
Health
Science
Politics
Washington
Offbeat
Weather
Raw News
Multimedia Gallery
Podcasts
News Summary - Audio
News Summary - Video
Today in History
PhotoWeek
SportsWeek
U.S. Census
Special Reports
Fifty fabulous years of Motown
Motown Records, one of the most iconic sounds of the 20th century, was founded in Detroit in 1959 by Berry Gordy. - Jan. 7, 2009
Rep. John D. Dingell, America's longest-serving Congressman - Feb. 6, 2009
Detroit in transition - Sep. 11, 2008
The inauguration of Barack Obama, 44th U.S. president - Dec. 4, 2008
Continuing coverage: Auto industry in crisis - Nov. 13, 2008
More Special Reports
Site Index
Essentials:
Home
Page One PDF
Sports PDF
Weather
Horoscope
Lottery
Crossword
Sudoku
Contact Us
Multimedia:
Photos/Video
News Photos
Autos Photos
Audio Galleries
Video
Photo Store
News:
Nation/World
Politics/Govt.
Elections
Religion
Local/State:
Metro/State
Wayne
Oakland
Macomb
Livingston
Commuting
Schools
Michigan History
Charlie LeDuff
Obituaries
Death Notices
Autos:
Autos Insider
Drive
Joyrides
Auto Shows
Auto Reviews
Auto Photos
Autos Talk
Test Drive blog
Business:
Business News
Personal Finance
Stocks
Technology
Sports:
Sports
Lions/NFL
Pistons/NBA
Red Wings/NHL
Tigers/MLB
Shock/WNBA
MSU
U-M
More Colleges
High Schools
Golf
Motor Sports
More Sports
Scoreboards
Entertainment:
Entertainment
Music
Calendar
Movies
Movie Finder
TV Listings
TV/Radio
Restaurants
Wine Report
Celebs
Performing Arts
Puzzles/Games
Forums:
Forums Index
Lions Talk
Wings Talk
Pistons Talk
Tigers Talk
Ask John Niyo
Big Ten Talk
News Talk
Autos Talk
Faith Talk
Opinions:
Editorials
Letter to Editor
Blogs
Columnists
Cybersurveys
Lifestyle:
Lifestyle
Homestyle
Food
Recipe Finder
Health/Fitness
Fashion/Shopping
Families/Parenting
Travel/Recreation
MichMoms
MichDads
Other
Special Reports
<script language="JavaScript" type="text/javascript">document.write('<a href="
http://servedby.advertising.com/click/site=0000760148/mnum=0000697142/cstr=81166343=_4a0e013f,1835805851,760148^697142^1^0,1_/xsxdata=$xsxdata/bnum=81166343/optn=64?trg=
http://clk.atdmt.com/CNT/go/143350944/direct;wi.728;hi.90/01/" target="_blank"><img src="
http://view.atdmt.com/CNT/view/143350944/direct;wi.728;hi.90/01/"/></a>');</script><noscript><a href="
http://servedby.advertising.com/click/site=0000760148/mnum=0000697142/cstr=81166343=_4a0e013f,1835805851,760148^697142^1^0,1_/xsxdata=$xsxdata/bnum=81166343/optn=64?trg=
http://clk.atdmt.com/CNT/go/143350944/direct;wi.728;hi.90/01/" target="_blank"><img border="0" src="
http://view.atdmt.com/CNT/view/143350944/direct;wi.728;hi.90/01/" /></a></noscript>
© Copyright 2008 The Detroit News. All rights reserved.
Terms of Service
Contact
Help
<img src="
http://gntbcstglobal.112.2O7.net/b/ss/gntbcstglobal,gpaper123/1/H.3--NS/0" height="1" width="1" border="0" alt="" />