GM angers unions with plan to import Chinese-made cars
DURING the 2012 election, President Barack Obama held up his bailout of General Motors (GM) as a model in the fight against China’s growing manufacturing dominance, telling voters that the auto rescue would reverse the industry’s multidecade trend of outsourcing.
A single election cycle later, the question of government support for vehicle makers has all but disappeared from the political discourse, yet Detroit is back to sending jobs out of the industrial Midwest.
And now GM is leading the way on Chinese outsourcing, announcing it will become the first US firm to import a vehicle made in China to the US. It’s about time taxpayers ask what their $50 billion (R717bn) rescue really bought them.
Starting next year, GM will import between 30 000 and 40 000 Buick Envision crossovers a year from a plant in Shandong Province. That won’t make the Envision one of GM’s best-selling models, but it will greatly outsell the only other Chineseimport car on the market, the Volvo S60L.
Breaking stigma
More importantly, GM’s pioneering Chinese import will likely help break down the consumer stigma attached to Chinese cars, leading the way for other vehicle makers to follow suit. If a bailed-out company can get away with selling Chinese cars in the US, there’s no doubt that the rest will try too.
The Envision is just the tip of GM’s Chinese iceberg: though the firm has not announced further plans to import other vehicles from Asia, it is increasingly making China a hub for new vehicle development and global exports.
The next generation of GM’s small- and medium-sized vehicles will be offered with a new engine and high-tech dual-clutch transmission co-developed with its Chinese partner, the Shanghai Automobile Industry Corporation.
The two companies are also jointly creating an entire family of small vehicles to be exported from China to markets around the world.
Taxpayers are not the only ones GM appears to be abandoning. The United Auto Workers (UAW) is incensed by the Envision decision. As union vice-president Cindy Estrada told the Detroit Free Press in August when the rumours of the plan surfaced, “After the sacrifices made by US taxpayers and the US workforce to make General Motors the profitable quality company it is today, UAW members are disappointed with the tone-deaf speculation that the Envision would be imported from China.”
Yet given that the UAW has a new wageraising contract nearing ratification, it can be argued that the union may have brought some of this disappointment upon itself.
Canadian commitment
But perhaps it is in Canada, where the government spent $10bn rescuing GM and Chrysler, where anger is most justified. With GM’s “vitality commitment” – made to protect jobs in Canada as a condition of its bailout – expiring at the end of next year, the automaker has already decided to cut 1 000 jobs from its Oshawa, Ontario, plant when production of the Chevrolet Camaro ends there next week. GM has hinted that more outsourcing could follow.
And as a new Liberal government is taking power in Ottawa, GM is pushing for “more amenable” subsidies than the $750 million in loans that had been offered by the outgoing Conservatives. If new Prime Minister Justin Trudeau does not bow to GM pressure – turning those loans into grants that it need not repay – the automaker may well pull even more jobs from a country that stood by it at its darkest hour.
Mexican production
In the short term, Canada’s loss is the US’s gain, as Camaro production moves from Oshawa to Lansing, Michigan. But the long-term beneficiaries of GM’s outsourcing are China and Mexico, which did not lift a finger during Detroit’s crisis.
GM is doubling production in Mexico through 2018, spending $16bn on development. It plans a 65 percent production increase in China through 2020. In the US and other traditional GM partner nations such as Canada, Australia and South Korea, job levels will remain relatively flat or decline.
Government support from all these nations may have slowed the tide of jobs flowing to Mexico and China, but they have not stopped it. And if they want to stem the job-bleed in manufacturing, they’ll likely have to pay GM for the privilege.
Next time GM finds itself in trouble, it might make more sense for China and Mexico to do the rescuing. – Bloomberg The government itself has been quite bullish about transforming state institutions and there is clearly a significantly better representation of black people within government structures. However, there are obvious challenges with that approach in respect of employee experience.
Since the inception of BEE legislation, the private sector has come to the party to improve their transformation initiatives. However, the private sector is largely driven by BEE legislation and there is a commercial drive to have a high level of BEE compliance, so it is not unusual to find that if a particular sector or company is not commercially impacted by a lack of compliance, then there is very little transformation in that sector.
One of the key elements of the implementation of BEE is that there must be careful assessment and enforcement of equity shareholding to ensure there is no fronting and in terms of employment, to ensure that people are placed in positions in accordance with an employment equity plan that was properly consulted upon.
Enforcement and assessment of the laws and regulations must be improved upon. In this regard, the BEE Act was amended last year to criminalise fronting, to impose harsh penalties for it (such as a fine of up to 10 percent of turnover on an offending company) and to force rating agencies to report incidents of fronting.
As citizens, we should all be excited about BEE because it serves as a tool to remedy the economic injustices of our past and to make us all equal to each other. However, it is not a perfect system and its implementation needs to be improved by all involved. At the end of the day, BEE has to be seen as part of a bigger process, the aim of which is to normalise our society.