Talk about a controversial topic...being in the computer field it makes me very nervous when I see work shipped over to India at an alarming rate. GM has certainly joined the fray by sending more work overseas, where it is cheaper.

http://www.detnews.com/2004/autosins...a01-100387.htm

What does this mean as American manufacturers become more "Global"? Will we be able to recognize the Big 2 as American car manufacturers 20 years from now?

 

It's all just part of the game.

Being in the industry, I can tell you a few things:

1) Our plant in Michigan routinely underbids our plants in Mexico if the volume is high enough for them to automate it.

2) Our plants in China can't beat ANY North American location on darned near anything, simply because the added cost of warehousing and transportation from China to here is not offset by the difference in labor rates.

3) GM cannot build a motor or transmission less expensively in China than they can in North America. As I've said before, there's only 3 hours of labor in an engine now - not enough to offset the transportation and warehousing costs.

4) I have run into some REALLY ugly problems with Korean and Chinese suppliers - resulting in "we're going to shut an assembly plant down" because they can't make shipments on time or don't tell their customers when they run into a problem. In my career I have directed more sourcing FROM an Asian supplier to a North American one than the other way around.

 

Im strongly against this too... I plan on going to college for computers but more and more of that idustry is being shipped overseas like you say.

I also believe that outsourcing is the source of our weak economy.

 

And money hungry corporations out to save a penny any and however way they can. The only thing they care for is their bottom line.

 

Outsourcing is great for the short term bottomline but what about the overall longer term (15+ yrs) effect on this conuntry's economic morale and health?

People want goods and they want then cheap so global manufacturers compete to produce them as cheaply as possible. Here in the US, the unions want to ensure their members have good benefits and pay and a decent standard of living. It's 6 of 1 and half dozen of the other. Somehow someone has to find some way for the twain to meet and agree and compromise.

Then again... it's inequalities in the global standards of living that are a catalyst for all this to happen. China, Korea, Mexico... these people do not yet have the same standards and expectations as their US counterparts. They do not have the same civil rights or strong unions to back up their demands. So outsourcing to these countries means production costs can *potentially* be cheaper than here in the US. There's other factors too of course.

Yet hypothetically if the economic roles were reversed and the US were not the leading world economic super-power, it would be these other 2nd tier economic nations that would be outsourcing to keep their costs down and hold their place in the global marketplace.

 

Pacer, thanks for the insight. One thing to note is that the latest round of GM outsourcing accounts for less than 1% of GM's total manufacturing budget. $48 million's worth is a microscopic amount when you're talking about a company like GM. With all the whining and finger pointing that import lovers are doing on other boards about this move, you'd think GM already packed up and left. I challenge those people to find their precious Toyota making all but less than 1% of their manufacturing in the United States.

I suppose manufacturing will overall stay here because parts cannot be physically sent over modems. Now if we can figure out a way to keep IT work here....

 

The "Trend" of the Day is "Core Business", ex: What is our core business(GM says) = Building cars.....so things like Logistics, housecleaning, some parts making etc. that can be done by a company where "THAT" (whatever good or service) is they're only buisness and they do it cheaper and so called more efficiently, gets "Outsourced"......(but some degree of control of quality and reaction time to problems is lost...and sometimes creates uncontrolled expensive downtime..)

I personally believe, they're going too "Core", not just GM but manufacturing as a whole...especially when everything outside the "Core" gets done cheap, paid cheap, but quality is expected not to suffer...

 

yet the engine on the new Equinox comes from china and the tranny from japan...

 

You forgot their multi-million dollar bonus, stock options and all at the end of the year.

 

Capacity.

The only way you can get it to make sense is if you have to tool up a plant to make the engine and/or transmission in North America, but don't have to tool one up or build one in Japan or China. Tooling up a transmission line or engine line comes with numbers like BILLION attached to it.

If there is a plant that exists from a sub-supplier and has the capacity to handle the volume, you can make the business case make sense to build it there by considering the capital investment and brick and mortar mentioned above. That's why GM buys T-56's, and doesn't manufacture their own 6-speed, high torque, RWD manual.

Note the production locations for GM's CORE engines - the LS1/Vortec family of V8's (Romulus MI, Silao MX, St. Catharine's ON), the 4200 I6 (Flint, MI), Ecotec (Tonawanda NY, Kaiserslautern Germany, Spring Hill TN), the 3800 series (Flint MI) the 4L60/4L65 automatic transmissions (Toledo OH, Romulus MI, Ramos Mexico), the 4T65 automatic transmission (Warren MI).

Just with those, you polish off the VAST majority of GM's cars and trucks.

 

I understand. But you also have to consider the fact that China's domestic demand for vehicles will keep growing drastically for the forseeable future. This means that more plants are inevitably going to be built there to handle internal supply at the minimum. Because if we're dead even with them on the cost of bringing their production here vs. producing our own, it won't be true in reverse. Therefore, new plants/suppliers will be built with future expansion in mind, but in the mean time, their extra capacity will likely be used to supply demand elsewhere. Like here in the US for example. So even if our suppliers hold on to the business they already have, they will not be expanding as they should be (if they are doing things properly) as they otherwise would.

If we follow the "a penny saved is a penny earned" logic, this is the same as losing business.

 

My first reaction is not to buy GM ever again. But then again, just about everyone is doing it. Am I never going to buy a car again?!

This stuff is bad. Very bad. What gets me is I read an article somewhere by some boob who compared this to the steel industry x years ago when everything was going over seas. Basically, if no one cared about the steel workers then no one should care about programmers. Eh, not quite an apples to apples comparison. A lot of the stuff being shipped overseas isn't just help desk/support positions. There are a lot of programming and networking stuff going over seas. The problem: a lot of people overseas are seeing our data and gaining access to our networks. It wouldn't be that hard for a foreign agent to do something with the data and really mess up some companies. If enough Fortune 500 type companies were compromised, it could really mess our economy up. But wait, there is more. It's not just the private sector that's doing this, it's also the government and military that's doing this as well. More and more foreign companies are being given access to more and more of our government and military through outsourcing. Not long ago, there was a big push started to get as much of our naval fleet automated as possible. Most of the work is being done thru foreign companies/oursourcing. Question: if someone sends a certain kind of signal to a battleship, would it cease to function due to malicious code being put in by a spy for another government? Don't laugh at all this or think it's being blown out of proportion. It's a serious matter that's getting worse.

 

Lol, it just seems like they start saying things like Housekeeping, logistics, shipping, IT aren't our core competency, lets outsource them. Then they start saying well, we just want to make the cars, not the parts... lets spin off our parts divisions and buy all of our parts... then...well... we aren't really an engineering firm... we just want to build cars....then... we aren't a manufacturing firm... we just want to market cars... and eventually GM or Ford will each consist of one single employee at the end of someone elses assembly line in someone elses factory whose job it is to place the emblem on the front of the car.

 

Exactly!...some things, I understand using a "Specialized" company in their area of expertise, no benefit packages etc = Money saved...but just as you said, when is it going toooooo far??
If there's tons of expensive specialized equipment needing specialized experts, I can see it...let someone else spend their money and time, just pay the man for his service...BUT outsourcing everthing except assembling the vehicle, to me, is just plain rediculous...no control, slow to react to whatever, expensive downtime, quality compromises etc...
I don't want to drive 150MPH in a vehicle full of parts made by the lowest bidder...