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Global Motors
Joann Muller
Forbes Magazine
GM has a surprise for its detractors: Those foreign entanglements are starting to pay off.
When General Motors bought up parts of bankrupt Daewoo Motor in October 2002 you could almost hear the derisive laughter around the world. The Korean carmaker was a disaster. Its market share at home had fallen by half, to 10%. Unions were growing more militant by the day, and elsewhere around the world the Daewoo brand had faded into obscurity. Here was another silly GM alliance.
GM executives hunkered down. They were looking at Daewoo as a modest gamble, a way to sell some cars to Koreans and little more. But globalism can exert a mighty pull. Soon GM injected Daewoo with grander ambitions, as a base for exports throughout Asia, especially the booming Chinese market.
Today Daewoo's factories, which had produced so few cars they turned down the thermostat, have now doubled their capacity utilization. Vehicles made at Daewoo factories are being exported to GM-related companies in 120 countries in Asia, Europe and North America. The Daewoo brand may be long gone in the U.S., but Daewoo-built cars are sold here as the Chevrolet Aveo, the Suzuki Forenza and the Suzuki Verona. In China and other parts of the world Daewoo-designed cars are sold under several names: Daewoo, Buick, Chevrolet and Suzuki. GM Daewoo Auto & Technology is expected to produce 800,000 vehicles in 2004 and post a profit by 2005.
The Asian outpost was a bargain. GM picked it up for a $250 million equity investment.
GM's quest for global synergies got off to a rocky start, and it wrote off most of the $3 billion it put into Fiat (where a recapitalization has shrunk GM's stake from 20% to 10%) and Isuzu (where it later pumped in another $500 million). But now, after years of benign neglect, GM is putting the pieces together, tapping the engineering, manufacturing and distribution resources of its global partners. Saabs will be made in Japan, for example; Pontiac GTOs, in Australia. The strategy has the potential to save billions of dollars, dramatically speed up product development and give GM an edge in emerging markets.
Go global or get slammed. "Your competitor isn't just across the street anymore," says GM Chief Executive G. Richard Wagoner. "It's from Korea, from Japan, from Europe. So I think it's required everyone to elevate their game."
For years GM operated as a loose federation, in which Opel in Europe and Holden in Australia each had their own product development and assembly operations, separate from North America. Now duplicate engineering efforts and factories running at less than full capacity are a luxury GM can't afford.
Globalism does not, however, mean that cars have to look identical across the globe. The designs are different, but the underbody components are the same and are pieced together in the same manner. Just as important, GM is overhauling its factories around the world to equip them with flexible machinery that can be programmed to build several different models. Down the road, that will give GM the efficiency and flexibility to do what once seemed unimaginable: building Saabs, for instance, at an underutilized Chevy factory in the U.S.
Even in its early stages Wagoner's "one GM" strategy has already produced hundreds of millions of dollars in savings.
Full Article Here
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Joann Muller
Forbes Magazine
GM has a surprise for its detractors: Those foreign entanglements are starting to pay off.
When General Motors bought up parts of bankrupt Daewoo Motor in October 2002 you could almost hear the derisive laughter around the world. The Korean carmaker was a disaster. Its market share at home had fallen by half, to 10%. Unions were growing more militant by the day, and elsewhere around the world the Daewoo brand had faded into obscurity. Here was another silly GM alliance.
GM executives hunkered down. They were looking at Daewoo as a modest gamble, a way to sell some cars to Koreans and little more. But globalism can exert a mighty pull. Soon GM injected Daewoo with grander ambitions, as a base for exports throughout Asia, especially the booming Chinese market.
Today Daewoo's factories, which had produced so few cars they turned down the thermostat, have now doubled their capacity utilization. Vehicles made at Daewoo factories are being exported to GM-related companies in 120 countries in Asia, Europe and North America. The Daewoo brand may be long gone in the U.S., but Daewoo-built cars are sold here as the Chevrolet Aveo, the Suzuki Forenza and the Suzuki Verona. In China and other parts of the world Daewoo-designed cars are sold under several names: Daewoo, Buick, Chevrolet and Suzuki. GM Daewoo Auto & Technology is expected to produce 800,000 vehicles in 2004 and post a profit by 2005.
The Asian outpost was a bargain. GM picked it up for a $250 million equity investment.
GM's quest for global synergies got off to a rocky start, and it wrote off most of the $3 billion it put into Fiat (where a recapitalization has shrunk GM's stake from 20% to 10%) and Isuzu (where it later pumped in another $500 million). But now, after years of benign neglect, GM is putting the pieces together, tapping the engineering, manufacturing and distribution resources of its global partners. Saabs will be made in Japan, for example; Pontiac GTOs, in Australia. The strategy has the potential to save billions of dollars, dramatically speed up product development and give GM an edge in emerging markets.
Go global or get slammed. "Your competitor isn't just across the street anymore," says GM Chief Executive G. Richard Wagoner. "It's from Korea, from Japan, from Europe. So I think it's required everyone to elevate their game."
For years GM operated as a loose federation, in which Opel in Europe and Holden in Australia each had their own product development and assembly operations, separate from North America. Now duplicate engineering efforts and factories running at less than full capacity are a luxury GM can't afford.
Globalism does not, however, mean that cars have to look identical across the globe. The designs are different, but the underbody components are the same and are pieced together in the same manner. Just as important, GM is overhauling its factories around the world to equip them with flexible machinery that can be programmed to build several different models. Down the road, that will give GM the efficiency and flexibility to do what once seemed unimaginable: building Saabs, for instance, at an underutilized Chevy factory in the U.S.
Even in its early stages Wagoner's "one GM" strategy has already produced hundreds of millions of dollars in savings.
Full Article Here
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