GM May Focus on Cheaper Imports, Cut US Jobs
General Motors is engaged in negotiating a reorganization that could increase vehicle imports from its plants in Mexico and Asia while closing factories and cutting the work force in the United States.
That approach drew a sharp rebuke from the United Automobile Workers union on Friday. In a letter to each member of Congress, the U.A.W., which represents G.M. factory workers, argued that to qualify for more government assistance, the auto giant should be required “to maintain the maximum number of jobs in the United States.”
The administration, however, appears to accept the proposition that to return to profitability as quickly as possible, G.M. must import a significant percentage of cars from its plants in low-wage countries, like Mexico and China, or low-cost countries, like Japan.
G.M. already imports a third of the vehicles that go to showrooms in this country. That percentage would not change in the plan that G.M. is preparing to submit to the administration to justify billions of dollars in new loans to stave off collapse.
G.M. would emerge a smaller company, with fewer employees and less output in this country and abroad. But imports would rise from low-cost countries, particularly Mexico and China, and that would be offset by fewer imports from Canada and Europe.
Some economists, like David Autor of M.I.T., say that G.M. cars made in China, among other countries, “are pretty competitive and could be sold here.”
Others, like Harley Shaiken, at the University of California, Berkeley, argue that if G.M. focused more intensely on technology and auto quality, it could concentrate production in the United States and still be competitive. “The other way to go,” he said, “is to cut costs by importing more vehicles from Mexico and China, and lifting the bottom line that way.”
A Treasury spokeswoman said over the weekend that “G.M. and the U.A.W. are in active and constructive deliberations around all aspects of their plan. This is one of several issues they are focused on and the administration is supportive of their efforts to come to a resolution.”
G.M. is asking Washington for billions of dollars more in federal loans to survive, on top of the $15.4 billion already borrowed. In a presentation to Congress, the company laid out the plan for the shifts in production to lower-cost countries. In the United States, G.M. would close 16 of its remaining 47 plants and eliminate an additional 21,000 jobs. The company also announced on Friday that 1,100 dealers would be eliminated from its American network by the fall of next year.
In the letter to Congress on Friday, Alan Reuther, the U.A.W.’s legislative director, also argued that if G.M. cut back production in Canada, it would hurt small manufacturers in the United States that supply parts to G.M.’s Canadian assembly plants.
But the Obama administration apparently sees interference in such plans as crossing a line into industrial policy, rather than helping a giant multinational get back on its feet as a successful, privately managed global operation.
Insisting that G.M. preserve American jobs by shifting production to the United States from abroad, this argument goes, would require many times more in federal aid than the $16.3 billion in loans now anticipated.
“The idea is to get G.M. off the government dole,” Mr. Autor said. “And if that is the case, then one has to take the steps that a free-standing company must take to be profitable.”