Tuesday, April 7, 2009

Should GM Go International and Leave The USA Altogether?

Sometimes you lose site of a real situation. General Motors is still a successful company.

Just not in the United States.

From Foreign Policy.com
How GM Built Factories in Uzbekistan While Closing Them in Detroit

For example: "CHINA
Recent moves: In September 2008, GM launched the construction of a $250 million corporate campus in Shanghai. In two years, GM plans to introduce its new electric model, the Chevy Volt, to the Chinese market.

It's safe to say that if GM survives, it will have China to thank.

Signs of sucess?

For years, the company's Chinese division has been a lone bright spot in its mostly bleak portfolio. In 2008, GM's sales in China rose 6 percent (albeit, down from an incredible 18.5 percent the year before) to 1.1 million vehicles while worldwide sales fell 11 percent.

All told, GM invests about $1 billion per year to expand production in the world's fastest-growing car market. It boasts 10 wholly and jointly owned subsidiaries with more than 20,000 employees and is the country's largest automaker.

Unfortunately, even the Chinese division has been losing a bit of luster lately with too many brands and its popular Buick models losing out to Japanese competitors.

But GM did catch a break from Beijing's stimulus plan, which subsidizes van purchases by as much as $1,170. With van sales rising 30 percent in the two months after it was announced, this intervention has already proven more valuable to the company than the billions provided by U.S. taxpayers."

For example: "BRAZIL

Recent moves: In April 2008, GM announced a plan to build a $200 million engine plant in Joinville, Brazil. The plant is scheduled to be operational by the end of 2009 and will manufacture flex-fuel engines for the ethanol-dependent Brazilian car market.

Signs of success?

GM has been doing business in Brazil since 1925, and its GM do Brasil subsidiary is its third largest in the world. GM's Brazilian sales jumped 18 percent to nearly half a million vehicles in 2007. Interestingly, GM's new chief executive, Fritz Henderson, made his reputation as president of GM do Brasil in the late 1980s and early 1990s, transforming it from a backwater into a $1 billion a year business that top executives called a "model for GM's future." Brazil is understandably concerned about the future of GM -- the country's stock market fell 3 points after the company's restructuring plan was rejected by the U.S. government -- and announced new tax breaks for automakers this week.

How about India?

Recent moves: GM opened a second plant in India in September 2008, bringing its production capacity there to 225,000 vehicles per year. It also announced plans to double the number of dealerships and service centers throughout the country.

Signs of success?

GM India, a wholly owned subsidiary producing Chevrolet models, was established in 2004 and has enjoyed years of double-digit growth. Despite the global recession, GM India experienced 20 percent growth in sales in 2008. Although that figure is expected to fall this year, the subsidiary remains bullish about its future and is planning to launch a new minicar to compete with Tata's $2,000 Nano.

As for the new plant, it represents is an effort by GM, along with Tata, Volkswagen, and others, to establish a presence in Pune, a fast-growing manufacturing hub two hours outside of Mumbai. Soon after the deal was inked, one Indian industrial official predicted that soon, "Detroit will call itself the Pune of the U.S."

Don't forget Russia.

Recent moves: In November 2008, GM opened a $300 million plant on the outskirts of St. Petersburg that will produce 70,000 cars per year.

Signs of success?

Just a few days after attacking U.S. foreign policy and vowing to station missiles on Europe's doorstep, Russian President Dmitry Medvedev was cutting a ribbon at the opening of GM's first Russian plant, praising it as an example of U.S.-Russian cooperation.

GM's sales in Russia grew 73 percent between 2005 and 2007, giving the company an 11 percent market share of what was, before the crash, predicted to become Europe's largest car market by 2009.

Unlike other emerging markets, where GM owes much of its success to compact cars and light trucks, GM has scored in Russia by selling SUVs and Hummers to the country's newly rich.

The good times couldn't last forever, though. The Ministry of Industry and Trade predicts Russian car sales will fall 60 percent in 2009.

Did you know about UZBEKISTAN?

Recent moves: On March 26 of this year, UZ-Daewoo, a venture partly owned by GM through its Korean subsidiary Daewoo, announced a plan to open a new car plant in Tashkent, the capital of Uzbekistan, to produce 15,000 Chevrolets per year and create 1,200 jobs.

Signs of success?

Along with local partner Uzavtosanoat, GM has been producing Chevrolet and Daewoo models in Uzbekistan for sale domestically and throughout Central Asia since 2007. It produced 200,000 vehicles in the country in 2008.

Speaking in Uzbekistan at a ceremony for the creation of GM Uzbekistan, recently ousted chief executive Rick Wagoner described the region as one of the "world's fastest-growing markets."

To support its growth in Uzbekistan, GM established a powertrain partnership in 2008 with the goal of eventually building 360,000 engines per year for Uzbekistan and regional export.

GM may be coming to regret its Uzbek gamble, however. Production at its factory in Astana fell 14 percent in the first two months of 2009 thanks to sagging demand from Russia.

Imagine if you would " GM International" Maybe, just maybe.

This article taken from Foreign Policy.com http://www.foreignpolicy.com/story/cms.php?story_id=4789
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