High shipping costs forces GM to reduce foreign outsourcing

[HoosierRon]

Rising shipping costs may see GM source closer

DETROIT, June 26 (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) may look to source some materials or parts closer to the United States because of rising shipping costs, a senior executive said on Thursday.

Bo Andersson, group vice president in charge of GM's global purchasing, said the automaker may look at it on a "case-by-case" basis.

He said half of the cost of shipping materials or parts is based on the price of fuel.

"Example, typically it costs us $2 to ship a radio from Asia to U.S. It's not a big thing." Andersson said. "It costs us $20 to ship a wheel from China to US. So it's case by case."

Andersson said a weaker U.S. dollar was aiding U.S. suppliers, who have been hurting from high raw material prices and competition from low-cost foreign rivals.

"With the fall of the dollar, U.S. suppliers are more competitive on a global basis," Andersson said.

GM's global annual purchasing budget is about $94 billion, with $58 billion for North America, according to the automaker. The figure includes $33 billion for the United States alone.

[CJ Thunder]

I am glad that all this is happening. The US needs a kick in the shorts to realize nothing is free and that dominance needs to be a continually rising goal.

[PRO_USA1776]

I know I am in the minority of most Americans, but I put my money where my mouth is. I purchased a set of fly fishing gortex waiters from the only company in the United States that manufactures them here; in Montana specifically. $500.00 bones - yes expensive, however I am thinking long term. I will have them 50 yrs, 10 dollars a year. A small price to pay, especially when you pay more than that to see some garbage put out by America hating hollywood!

[MaxLegroom]

I've found it disappointing that the Japanese can source all the components for Japanese built cars in Japan, but that GM, Ford or Chrysler cannot do the same. I'd like to see them bring the manufacturing of these parts back home.

[camaro_freak]

about time GM... about time

Consumers need to realize we should not be so concerned over who has what product the cheapest (aka WAL-MART) and focus more on those goods that are still made here on US soil.

[Sal Collaziano]

Outsourcing in America is more expensive than outsourcing outside the country. This is why GM has done this until now. So, what's going to change? They're not going to gain financially from this.. Maybe they're feeling that since it's no longer a bargain to outsource, they'll pay the hefty fee for American labor... I guess it works out in the end..

[osv_alero]

Originally Posted by PRO_USA1776

I know I am in the minority of most Americans, but I put my money where my mouth is. I purchased a set of fly fishing gortex waiters from the only company in the United States that manufactures them here; in Montana specifically. $500.00 bones - yes expensive, however I am thinking long term. I will have them 50 yrs, 10 dollars a year. A small price to pay, especially when you pay more than that to see some garbage put out by America hating hollywood!

My wife and I are no different. We don't shop walmart, we check for the made in USA label and we avoid companies with bad employee relations. The best way for us to tell companies what we want is by putting our money to products that support our beliefs.

Example; The next time you buy socks check out where they are made. Nike makes socks in the US and China. They look the same and come in the same sizes. You just have to spend 5 seconds to read which one is made in a place that doesn't add to our billion dollar a day trade deficit.

[hotrod1949]

This is a good thing, but their logistics need to be brought into the world of $5+ a gallon fuel as well. Half loaded trucks, expedited shipments do to poor inventory control and other issues would save them many millions of dollars.Strict JIT doesn't work at these fuel costs.

[montrealvue]

Originally Posted by hotrod1949

This is a good thing, but their logistics need to be brought into the world of $5+ a gallon fuel as well. Half loaded trucks, expedited shipments do to poor inventory control and other issues would save them many millions of dollars.Strict JIT doesn't work at these fuel costs.

Good point. I think (and hope) JIT is going out the window as it jack up costs significantly. However, major retailers still want things on their shelves quickly an penalize suppliers severely if they cannot do so. I hope businesses will allow for rail shipping times instead of truck times to keep costs low.

[Ming]

Good.

The last thing we need is to become a country of Wal-Mart employees, Import-brand car salesmen and marketers without a means to manufacture things in our own borders. Having a solid manufacturing supplier base here in this country will help stave off that undesireable scenario.

On the other hand, Union-types should not get too happy about "returning to the old days", or Mexico will take up most of the slack.

[knicker26]

Ha ha ha ha ha

"We must buy all parts from low cost regions."

Ha ha ha ha ha ha

What a farce. Sounds good on paper. If all goes well you can do it, but it never goes perfectly.

Been there, done that.

[377Z]

So the 170 HP 3400 in the 2010 Equinox will be made domestically.

I wonder how overweight it will be...

[PRO_USA1776]

My question to you 377Z is when are you going to be a Mechanical or Industrial Engineer? It is easy to point out problems, how 'bout a solution?

[montrealvue]

Originally Posted by 377Z

So the 170 HP 3400 in the 2010 Equinox will be made domestically.

I wonder how overweight it will be...

Hey now, be nice....its 185 hp!.........lol. Don't hold your breath on it being "100% made in America"

[377Z]

Originally Posted by PRO_USA1776

My question to you 377Z is when are you going to be a Mechanical or Industrial Engineer? It is easy to point out problems, how 'bout a solution?

Well, the solution is easy. Either offer a competetive product at a lower price, offer a better product at a competetive price, or offer something the market demands that the competition does not offer at all at a price were the demand and supply curves meet. Simple enough?

I've been a Mechanical Engineer since 1998, not that my profession is in any way relevant to my ability to discern whether a product is competetive or not. The whole attitude that someone needs to be as good or better at something in order to point out shortcomings is absurd. Thats not how society works. Should only automotive designers be able to choose a car based on their looks? Do you need to be a good cook to tell when something tastes bad?

I desperately want GM to get it together & compete, & while I don't expect them to simply start making 3400's in the US instead of China, much less a weaker 3400, I wouldn't be surprised. I will wait until I am truly proud of what GM makes before I cheer for them & buy a GM product again.

But don't let me make you put down your pom-poms.