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GM increasing outsourcing of white-collar work to cut costs

Tuesday March 23, 1:37 pm ET

DETROIT (AP) -- As part of sweeping cost-cutting efforts, General Motors Corp.'s manufacturing arm plans dramatically increased spending on white-collar work in Canada and overseas, the company said Tuesday.

The latest spending plan, outlined in an internal company report, represents less than 1 percent of GM's global vehicle operations budget, said company spokesman Dan Flores.

"In 2003, we began offshoring activities moving $3.5 (million) of work to lower-cost locations," the report said, "and we are planning to increase that to $48 (million) in 2004."

The report was first detailed in a Detroit News story Tuesday. It is an annual review of GM's manufacturing organization by Gerald Elson, GM's vice president and general manager of vehicle operations.

Along with global outsourcing, Elson also discusses several other cost-cutting targets such as reducing overtime by 15 percent, slashing energy and water use and buying more robots for manufacturing plants from diverse sources worldwide.

Most of the white-collar work sent out of the country has gone to Canada, and that's likely to be the case again in 2004, Flores said.

GM said the work involves tasks not currently done by American workers and will not displace American workers.

"There isn't a strategy," Flores said. "There's no mandate to send x-number of dollars to a certain part of the world."

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Then why shouldn't I buy a honda accord that is manufactured in Ohio, or a Toyota Tundra that is manufactured in Indiana? Why should I buy a Equinox that is manufactured in Canada, the transmission is built in Japan, and the engine is built in China? I am considering buying an import that is not really imported. Why should I buy a 'domestic' car that IS imported?
 

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This isn't anything new. Rent Roger & Me about destroying Flint Michigan by putting 35,000 out of work by closing 11 factories in the 1980s.
 

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Originally posted by mbaluch8@Mar 23 2004, 04:31 PM
Then why shouldn't I buy a honda accord that is manufactured in Ohio, or a Toyota Tundra that is manufactured in Indiana?  Why should I buy a Equinox that is manufactured in Canada, the transmission is built in Japan, and the engine is built in China?  I am considering buying an import that is not really imported.  Why should I buy a 'domestic' car that IS imported?
Americans voted this way with their wallets. Blame Joe Public. Toyota's Camry and the Accord vie for the top selling car spot, not the Malibu or the Impala or the Grand Prix. Each time Joe Public rationalizes buying a Nissan or whatever because he likes it more or because it is assembled somewhere in the US, GM is pushed further towards becoming just as internationalized as the competition.

It's partially GM's fault that they let this happen, but its a vicious circle. Joe Public says "GM doesn't build the car I want", and sends more R&D cash to Japan or Germany so they can make a better car... There's also the media that says things like "There is a mysterious Panache that Imported cars have that make us want to buy them..."

If the American public isn't loyal to American engineered product, why should GM be loyal to the American public? Same goes -- If consumers don't buy Union product, but buy from Honda or Toyota non-Unionized plants, why should GM be stuck with the higher cost of Union labor while Honda and others simply counter with: "assembled in the USA"?

Despite the die-hard GM loyalists like me, the majority of Americans haven't cared about buying American for so long, that GM is in its rights to compete on even ground with the competition IMHO. Otherwise they simply face a long decline and a losing battle, despite great product. Look at the good reviews the Aveo and the Chinese engine / Japanese transmission powered Equinox have gotten - they're great, encouraging more like them. The Cadillacs have great reviews, too, but they can afford to be expensive and costly to design and build....they're Cadillacs.

That said, I don't like this "offshoring" stuff one bit. But like I said, every time an American sends money to other companies' R&D in some other country by buying an Import Brand, they push GM to do the same to keep pace.

GM is in the business of making money and answering to investors, not waving the flag while going down with the ship.
 

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That was a really good argument. With more and more jobs are going overseas (or simply out of the country), it seems thatthe US will eventually run out of money. The case will never be that extreme, but it seems that there will not be any jobs here and therefore no one here will have any money. Something has to be done to change this trend and it seems GM is not helping to turn this around (not that they are responsible for doing this, but it seems like the 'right thing to do').
 

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So, what jobs were they that US workers were not doing them?
When a factory closes the most common phrase coming from management is "It was a difficult decision". Meaning it took longer than 5 minutes of boardroom time when the immediate cost savings were advertised (5 minutes to plunk the new figures into the executives' hand held calculators tallying their projected bonuses).

Lutz's move to import is going to be longer lasting and more broad based as his tenure lengthens. I really do not think that the GTO is a quick, get one on the road endeavor but a general trend for GM to import Saabs and Holdens under a rebadge program. Instead of Chevrolet and Pontiac sharing the same platform (f-bodies, etc), it'll be Pontiac and Saab or Pontiac and holden sharing the same platforms but the build will be off shore. After all, Lutz answers to the major share holders.

So, who does Honda outsource to? Toyota? Probably nobody. There is one thing about outsourcing-you lose control. Maybe not so for a company like GM that can flex its muscle but smaller companies find that they must stand in line rather than have that department under their roof.

I am also of the opinion that I would have no reservations about buying a Honda, that employs people in the States, rather than a GM whose only American employees happen to sit in mahagony paneled offices.

And it does come down to Americans not giving US mfrs the decision when all things are equal. That is another reason that I bought the Monte-assembled in Canada but parts from the US.
 

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Originally posted by 69nova@Mar 24 2004, 09:40 AM
I really do not think that the GTO is a quick, get one on the road endeavor but a general trend for GM to import Saabs and Holdens under a rebadge program. Instead of Chevrolet and Pontiac sharing the same platform (f-bodies, etc), it'll be Pontiac and Saab or Pontiac and holden sharing the same platforms but the build will be off shore. After all, Lutz answers to the major share holders.

So, who does Honda outsource to? Toyota? Probably nobody. There is one thing about outsourcing-you lose control. Maybe not so for a company like GM that can flex its muscle but smaller companies find that they must stand in line rather than have that department under their roof.

I am also of the opinion that I would have no reservations about buying a Honda, that employs people in the States, rather than a GM whose only American employees happen to sit in mahagony paneled offices.
GM is technically NOT outsourcing since it own Saab and Holden divisions. It is more like insourcing.

Buy a Honda if you think that way...it is simply an absurd argument. There are plenty of mohaghany paneled offices in the Honda Corp. in Japan where the money you spent for the Accord goes to. You really think that Honda is more "patriotic" than GM? Corporations are influenced by money more than patriotism..
 

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Originally posted by cyboexpo2002@Mar 23 2004, 09:45 PM
This isn't anything new. Rent Roger & Me about destroying Flint Michigan by putting 35,000 out of work by closing 11 factories in the 1980s.
Apples and Oranges here. Flint went down the tubes because GM's market share shrunk. It wasn't about outsourcing...it was about getting smaller.

Today, it's about moving U.S. jobs overseas to make a quick buck. Or, in this case, help fund the incentives you need in order to sell your product.

The farce about outsourcing is two-fold:

1) That they need to jobs overseas to support local markets. Hogwash. For every 10 jobs they outsource, perhaps 2 or 3 are needed for local markets. The rest support the overall company or even the direct U.S. market.

2) Management get a pat on the back for a good fiscal year, but gets it the easy way. Rather than focus on great product that's sold at a good profit, they take the easy way out and just move jobs.

Do you know that the V6 in the Chevy Equinox is built in China, and shipped back to the U.S. for vehicle assembly? Not a piston or a sensor... the whole engine. Is this supporting the local Chinese market? Is it jobs that would not have normally been in the U.S.

Bad enough to outsource excessively... even worse to concoct lies about the rationale and magnitude. GM's credibility sucks.
 

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I'll re-phrase that paragraph.
I would have no hesitation about purchasing a Honda if that company employs more workers in the United States on the assembly and manufacture of the vehicle in comparison to an American named company that will import the manufacture and assembly of their vehicle.
Now, this is a dynamic statement since companies like Honda are building mfg plants in the States while companies like GM are going offshore. There may be a meeting in the middle since most of the movement is based upon the strength of the dollar v yen (Deutsch mark, pound, whatever). So, it maycome to GM and honda having equal interests in American labor. THEN it becomes a toss up as to who gets my dollar.
Bottom line-Whichever car has a greater vested interest in the American worker will get my dollar. Sorry, Saab, Holder, Suzuki-although owned by Gm falls into the same category as imports if they are built outside the United States.
Heck, I can purchase mutual funds (or stocks) of foreign countries as easily as any that back American industry if we're talking about shoring up my 401K's. I choose to back US industries.
 

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The one action that I cannot accept is GM (or Ford or Chrysler) workers buying non-GM (or ford or Chrysler) vehicles. If I can take the burden of supporting them, they damn well better do it also.
 

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Haven't most Auto Comapnies done the same thing to workers in their home countries? If I buy a Toyota in Japan what percent of the car is actually made in Japan anymore (vs china or Korea or Singapore). How about a VW in Germany, think it is all made in Germany (vs Romainia or Hungury or aisa)?

Like all other industries that have "globalized" it has become a race to the bottom, production moving to where the lowest wages are. It becomes a death spiral because once one major player does it, every one else has to compete.

The real question is, will these cost saving eventually lead to high paying jobs being created in the USA, Europe and Japan so someone can buy all these goods produced in 3rd world "cheap labor" countries?
 

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Then I guess everyone who has a problem with 'out-sourcing' had better bail out from GM right now. They are finally acting like what they are: A GLOBAL COMPANY.

Do you understand how GM is structuring their operations around a 'Center of Excellence" strategy? Do you have a fundamental problem with Australians being the technical center for RWD platforms? Or how about with Saab being the refiners of Small-Displacement Forced Induction Engines? Or Opel's new found efficiency in small-car design?

If you do, then you're probably an older guy who's stuck sometime circa 1970.

Each division has a home market with different needs. But the American Market has an appetite for them all. Why not leverage their individual talents in order to give the NA Market the best product you possibly can in the quickest time frame?

Lets face it. Instead of GM NA having to re-invent the wheel everytime they want to do something different, doesn't it make alot more to learn from other people's experiences. GM has the luxury of doing this since they have a corporate global scope that few other companies can even dream about. In the end, the money all comes back to Detroit.

So what if China is building GM 3.5L Engines? Good for them. Even better for the General because with the money saved from paying Unionized workers, he can use that money to :

1) Pay shareholders a larger dividend, thus raising stock price, and co-incidentally the fortunes of all Detroit Automakers.

2) Invest in new product lines.

3) Invest in innovative processes and manufacturing to further reduce costs. Which produces more profits, which allows more investment, which allows innovation, which produces more profits...

As long as the money is returning to Detroit, we all win in the end.
 

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Well I am not going to get into a macro economics and political debate here so this will be my last comment on the topic.

Yes, the outsourcing / moving of production to China and to Holden and to SAAB will help GM. But, if in the long run most of the "middle class" paying jobs go 3rd world countries, who will GM employee in this counrty. Management and service /distribution? Most of the former factory workers can't all become managers so that leaves services distribution which already has all the employees it needs and probably won't have to pay as much as more people will be trying to get those same jobs. So where do the displaced works go? To another company that is probably doing the same thing? Or do the "retrain" themselves to be hospital workers? Yeah I can see all these assembly workers becoming RNs!

Again if the sprial continues who will be in the MIDDLE CLASS to buy these wonderful cars made at such high profits?!
 

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Originally posted by Tico@Mar 24 2004, 06:17 PM
Haven't most Auto Comapnies done the same thing to workers in their home countries?
Difference is, the Japanese, Europeans, and Koreans all have a huge market in the U.S. Huge exports. If the same were true of GM, if they sized their foreign investment commensurate with foreign market, nobody would complain. Toyota has foreign investment linked with foreign demand. GM's foreign investment is based on projected demand...which may or may not materialize. If it does not, they figure they can always use the capacity to supply North America. Sounds good on paper, but it's really just weak, speculative management that costs value-added U.S. jobs for the sake of executive bonuses.

Don't lose sight of one fact that makes today's global economy mush more precarious for American workers... This is no NAFTA part deux... India is taking white collar jobs. China is taking blue collar jobs. The two countries combined contain about half the world's population, each being four or five times the size of the U.S. These two nations could absorb every single American job --every single one -- and they'd STILL have millions in the unemployment line. Until their own markets develop to support the workforce, we have to control how quickly we open the floodgates. I'm for small government, but in this case intervention is necessary. It's a fact that U.S. companies wishing to take the high road and keep jobs here will pay to the point of bankruptcy. So, I favor tax incentives for companies keeping jobs in America, and penalizes those outsourcing (based on the percentage of value that's outsourced). This levels the playing field.

I was for Bush in 2004 until I began to see how pathetically weak his economic policy is. Tax cuts to counter job losses, to the point of unprecedented budget deficits? WHAT?! Kerry's a forked-tongued idiot, but at least he talks about this issue with some level of intelligence.
 

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In the 70's, when Chrysler was facing bankruptcy, Lee Iacocca sat before Congress and gave his views of a government loan to the company. In his closing remarks, he stated that the government can deny any loan and Chrysler would go out of business and the government could take that money and dole it out as welfare and unemployment OR the government could loan Chrysler the money and the company will keep people working and fulfilling jobs. The government gave the loan and Chrysler did turn around and gave us some very good cars since (GM wishes that it had a Caravan).
Now, every country protects its own. The only reason for the EU is to pressure other hemispheres with a united front. Otherwise, those countries to give 2 cents about each other (and prove this point every 40 years). Do not tell me that the Japanese will buy domestic before anything-citing ergonomics in soft goods or farm protection. Why? A 70's era mentality? No, but sound business/economics practice. Outsourcing is akin to watching a starving man eat his arm to stave off death (our balance of trade?). And outsourcing is a theory that will run its course and like every other theory be tweaked as it matures. Name one economics theory that has not been improved after it failed in practice? economists are still arguingover Adams and Keynes proved the economists wrong when the government spent money to turn the depression around.
Outsourcing will cut the pins out of the middle class which is the stability of this society. No jobs mean no hope. So, with engineering being outsourced, where do the new graduates go? Can't all work as consultants-consult what? Without plants they are unecessary. With manufacturing being outsourced, where do the new machinists go? Why go to school? Why has India postured itself to be a information systems powerhouse? Why has Japan's government targeted one industry after another and become a leader?
Oh, everybody is going to become doctors or attorneys (What is it ? 2100-2200 billable hours per year which translates into 80-90 hour weeks). Don't think so. Don't need that many. Maybe we'll go back to some Thomas Jeffersonian era where everybody will be farmers (hate to tell you but it was the industrial revolution that put this country on the map).
What I find odd is that so many of the younger people have only a sense for today. if it is somebody else that is unemployed, so what if it. Don't look back, the tiger will be at your door shortly.
 

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Originally posted by mbaluch8@Mar 24 2004, 03:02 AM
Something has to be done to change this trend and it seems GM is not helping to turn this around (not that they are responsible for doing this, but it seems like the 'right thing to do').
if i was a GM shareholder and GM "did something" to change this trend i'd howl! GM wants to make money. if it isn't GM's responsibility (as you stated) it'd be insane for them to spend resources correcting it. doing something because it's "the right thing to do" will not help GM remain competitive. i mean it's not a human rights or ecological or ethical violation... problems of those nature must be dealt with.

and don't tell me that GM has faltered because of this situation (off-shoring, as ming so accurately described it)... i believe this is an effect of GM's poor performance, not a cause. and it's aiming to turn around GM's fortunes. i don't wish anyone out of their job... but it's a global market and it's fiercely competitive. it's easy to buy american if you're talking local made jam or hand-knit sweaters from an amish farm, but cars are a different story. and as everyone has pointed out, it's getting impossible to determine if a vehicle is "made in america" or not.

how many people truly make an effort to research products and buy american (or at least domestic, wherever you live)? your jeans? your fridge? your computer? if you do, good on you... i think that's admirable... but if i find a better price from an overseas competitor, i personally can't justify buying domestic. should i be more patriotic? i don't think i can afford to be.
 

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Originally posted by 69nova@Mar 24 2004, 06:16 PM
The one action that I cannot accept is GM (or Ford or Chrysler) workers buying non-GM (or ford or Chrysler) vehicles. If I can take the burden of supporting them, they damn well better do it also.
burden? i think you're foolish to buy a vehicle you feel you're burdened with. why not send your car payment to the government if you wanna be patriotic? i shudder to think employees would 'have' to buy their own product. if joe q. public GM line worker wants a taurus, who the hell is GM to tell them otherwise? if GM wants their employees to buy GM products, they have to offer more appealing vehicles.

that said, i think GM builds very appealing cars, and think it's fantastic when GM employees buy them... but it shouldn't be a given. these people deserve the choice afforded all american citizens. and i'm arguing your point.. not you. :D
 

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Outsourcing/exporting of jobs. This has become very 'trendy' for corporate America. It may have started before NAFTA. But, NAFTA set the stage about 10 years ago for international trade with Canada/Mexico. Then about 5 years after that there was GATT which brought the US to the WTO (World Trade Organization). Ever since big corporations have been moving offshores. The Automotive makers are not the only one doing it so are many others (DEll is one). I think one area that has not had this big switch to more imports and less exports is the Pharmacutical Corporations. If you want Drugs you have to get them from within the Country and you cannot get them at greatly reduced prices like in Canada.

Many promises were made with NAFTA that have yet to bear fruit and may never bear fruit except for Big Business. Since NAFTA and then GATT the USA has had Millions of lost jobs abd after 6 months to a year many fall of the statistical chart. Also, those that go back to work have had 20 to 70 percent reductions in annual pay. The only noticable increases have been with Big Business "big wiggs" seeing on avaerage over 400% increases in annual pay (by bonuses or whatever).

But I digress. Point is Big Business is running our Country. Companies like Enron that give 100's of thousands to campaigns for elections (And still are in business in South America). These same Big Business are the ones responsible for how NAFTA was written and how CAFTA and FTAA are being written. CAFTA, even though countries in Central America have loud voices against it, is currently being pushed by Mr Bush. So, this will not change. IMO

Because we are being sold out... I will be a customer to ANYTHING built in the USA and employs USA workers in Blue and White collar jobs.

We are heading into a One World Economy and USA will pay the MOST.

Please offer any criticism or argument. :argue:
 

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If the chef doesn't eat his stew, why should you?
It is not a demand from GM but a vote of confidence from its employees. The big factor of customer migration from US products is relibility (quality). How better to insure quality than to buy what one builds?
The word burden may be inappropriate. Rather if somebody carries the flag of buying American, at least those being protected should back it.
And it is true that the Made in America is getting muddled which is why I would have no reservations to buy an import name if the company manufactures in the US rather than a US name being mfr'd somewhere else.
What amazes me is that people feel insulated from the trend of manufacturing leaving these shores. Store clerks, doctors, accountants, teachers all feel that they are standing outside watching in. Without manufacturing and an escalalting trade imbalance, money is going to dry up. Who is going to pay their salaries when the middle class salaries decrease?
It's no different than the military. You have 3 combat arms (inf, armor, artillery). Everybody else (about 4 of 7) has a sole responsibility of transporting, feeding, nursing and arming these arms. Ordinance, Engineers, AG, etc. play a vital but secondary roll. Manufacturing is that arm since it makes money by selling to other countries and employs the public.
Right now, the US is like a guy who jumped from a 23rd story building. His friend, on the 16th floor, looks out a window and sees him pass. All looks well to the friend.
 

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Originally posted by actionjack@Mar 24 2004, 10:53 PM



We are heading into a One World Economy and USA will pay the MOST.

Yeah, that's definitely the case. I look at it as a floodgate principle. Each nation is a pool with different levels of water. Some are big-diameter pools (big population) and some are small-diameter (low population)... but we're looking at water level (GDP per capita). Each pool is connected by a flood gate. Bernoulli's principle tells us, if we open all the flood gates, the water level in each pond will eventually be the same. Our pool has a high level of water, and other HUGE pools like China are very dry. How low ours goes depends on two factors: 1) How quickly we open the gates, and simultaneously 2) How much water the other nations add to their own pools (their own economic growth)

Based on how quickly the others add water, we need to open the gates slowly enough so our water level does not change more than we want. Eventually, all gates are fully open, we've lost nothing, and all water levels go up and down together. That's full-scale globalization, and it IS a good thing long term. But mind the flood gates in the short term. Otherwise, our water will disappear like a pee stream in the sands of the Sahara. That's our problem here... no control on how quickly we open the gates. We're too open right now.

And the result of a dry pool is much more profound than immediate job loss. As we lose technical professions and manufacturing, we get weak... weak minds, weak innovation, weak military, etc.. We are a strong nation because of strong technical capability... which have grown over a long duration. We get behind here and the strong America we know is done.
 
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