FOR RELEASE: 2005-05-28

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Shanghai GM Completes New Plant

Doubles Annual Capacity to Accommodate Sales Growth


Shanghai – Shanghai General Motors (Shanghai GM) announced today the completion of its new $249 million plant. The facility, which is adjacent to its original manufacturing facility in Shanghai, more than doubles the annual capacity of the flagship joint venture of General Motors in China to 320,000 vehicles.

“The new plant reinforces Shanghai GM’s industry leadership position by enabling us to keep up with the growing demand for our existing products,” said Chris Gubbey, Executive Vice President of Shanghai GM. “At the same time, it gives us the ability to continue expanding our product lineup in order to capture more opportunities in what is expected to remain the world’s fastest-growing vehicle market.”

Shanghai GM’s new plant consists of three shops – body, paint and general assembly – and occupies a total area of 180,000 square meters. Construction was completed in 20 months, a record for China’s automotive industry.

The initial annual capacity of the new plant, which operates on two shifts and has 941 employees, is 170,000 vehicles. It officially began production of the Buick Excelle lower-medium sedan, Buick Excelle HRV hatchback and Cadillac CTS luxury sedan today.

“As part of the $3 billion in new investments in China announced by GM last June, the new facility demonstrates our confidence in the long-term prospect of the country’s vehicle market and our full commitment to grow aggressively with the market,” said Gubbey.

Shanghai GM currently has one of the largest product and brand portfolios among joint venture automakers in China. Its lineup of Cadillac, Buick and Chevrolet products covers segments ranging from luxury vehicles to small cars. The joint venture between GM and Shanghai Automotive Industry Corp. Group (SAIC) plans to launch an unprecedented number of new products this year.

“Shanghai GM’s new facility is adopting the advanced processes of our much-acclaimed Global Manufacturing System. It is yet another prime example of how we leverage the know-how, resources, and processes that are available within GM, to strengthen not only our own global manufacturing organization, but also the joint ventures we are involved in,” said Gary L. Cowger, GM Group Vice President Global Manufacturing and Labor Relations.

The new plant will have the flexibility to produce a variety of different models on the same line. It has also been designed to be environmentally compatible. Its paint shop, for instance, uses a world-class water-borne paint process that reduces pollution.

“We are very excited that this new facility allows Shanghai GM once again to leverage the expertise of its parent companies for the benefit of the local market,” said Gubbey.

In addition to its two plants in Shanghai, Shanghai GM also manages Shanghai GM Dong Yue Motors Co. Ltd., which is located in Yantai, Shandong, and Shanghai GM (Shenyang) Norsom Motors Co. Ltd., which is located in Shenyang, Liaoning. The combined capacity of these facilities is close to 500,000 vehicles per annum.

During the first four months of this year, Shanghai GM sold 72,876 vehicles. Its sales were the highest of any passenger car makers in China in March and April. In 2004, Shanghai GM sold a record 252,869 vehicles, which represented an increase of 25.7 percent from the previous year.

General Motors Corp. (NYSE: GM), the world’s largest automaker, has been the global industry sales leader since 1931. Founded in 1908, GM today employs about 321,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. In 2004, GM sold nearly 9 million cars and trucks globally, up 4 percent and the second-highest total in the company’s history. More information on GM can be found at www.gm.com.

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I really believe China will be what keeps GM afloat if things go from bad to worse here in North America over the next 10 to 15 years.

 

I could see the BRX but not the Sigma chassied cars.

 

I could see that too. The Japanese are disliked in China which give domestic built (Chinese) GM cars a nice advantage.

I can't beleive there is enough Sigma demand for a 2nd plant in Asia. I guess this will eventually be were all Australia and Asian Sigma Cadillacs will come from.

 

I would guess all the RHD Sigmas will be built in China as well LHD for the Asian market.

 

Its horrible for import brands to be made here but ok for GM to open factorys everywhere but the US and close the ones here? I guess I just dont get it.

 

Actually, China's "communist" system has given GM the initial advantage. Local communist party boses loved the Buick Century/Regal from the beginning. Now, it seem as if "capitalist" Chinese executives (some of whom are also local communist party bosses) are going to be hooked on the Cadillac brand.


How long do you think it will be before someone get the bright idea of importing Chinese Cadillacs into the United States?

 

My point exactly. Chinese labor costs will offset the import costs. Oh well, its where the profits go right? Oh wait, some of the profits seem to be going to new plants and upgrades in China. Some seem to be going to raise the Chinese standard of living. In the mean time the profits that paid the house and car payments of GM employees are being redirected.

 

GM's new Chinese capacity might not be used for direct imports to the United States - initially, at least - but as a "wedge" to force the re-negotiation of the UAW's contract.

Of course, in a worst case scenario....this new Chinese assembly plant might just form part of the basis for a re-structured (and far smaller) GM.....in a worst case scenario.

Don't make me spell it out.

 

...And then again, selling vehicles for a profit in other areas of the world gives you the cash to keep the business running and invest in new projects in less profitable areas (North America).

 

The difference is that China doesn't have the car market that the US does, so it's not like the Japanese auto makers that came here. I would see your point if we were manufacturing and selling these cars in Japan, but that's not the case. You make money where you can, and unfortunatley the UAW total compensation is digging the grave for GM right now.

If GM will be able to import these vehicles back to the US for less than we can make them here, then that will be a HUGE blow to the UAW. It's hard to imagine that happening though. It seems that would be tough to do even with the Chinese labor savings.

Dan

 

Assuming this works as GM plans and they can save money by importing these from China, if GM were to build more plants overseas would this give the UAW and CAW grounds to strike? Or are these plants cleared with the union before they are built?

 

China has a BOOMING car market and it is growing FAST. To assume that we are the only society with a good car market is ludicrous. China is going through an industrial revolution right now and is on track to oust the US in the number one position. We need to capitalize on it, just as other countries have capitolized on us. Just completing a full circle.

Look at it this way, at least China is open to the idea of US cars (Unlike our "supposed" allie Japan).

Chuck!: Good question???

 

I should have rephrased what I wrote, doh! I didn't mean to say that China doesn't have a large car market. The Chinese car market is huge. I meant to say that they didn't have a large ingrained automotive manufacturing sector like we did, that we are invading on. Sorry for the confusion.

Dan

 

Not quite. Foreign manufacturers must partner with a Chinese company in order to sell any quantity of vehicles in China, hence GM's 50-50 partnership with SAIC. And that means "sharing" tech data with Chinese companies that are not exactly known for their respect for intellectual property. If China was really open, GM could go it alone and import what they need. But that's not gonna happen.