Will GM import from China survive?

Shanghai, May 20 (Gasgoo.com) It has been an anathema of American union members: U.S. companies closing plants in their own backyard while importing products from low-wage countries.

Now it's the turn of General Motors -- to label "Made in China" on some cars to be sold in the U.S. market starting next year. GM plans to double its imports of vehicles into the American market to 736,547 units from 371,547 units over the next five years. Besides China, car imports will be boosted from Mexico, South Korea and Japan.

Industry trade sources have said that the Chevrolet Spark, a popular small car made in China, could be one of the vehicles that GM will deliver to the U.S. starting in 2011. And by 2014, GM would be bringing in 51,500 vehicles from China.

A model poses with a China-made car from the Chevrolet brand of GM during an auto show in Shanghai

Although still a tiny number -- the Fairfax plant alone makes nearly five times that many cars in a year: the fact that it's China strikes a nerve. Democratic Sen. Sherrod Brown of Ohio put it in a news release: "What's good for GM is no longer good for America."

The importing provision does not sit well with the union, which has shrunk by thousands of members in the past several years as GM has closed more than two dozen plants. The auto giant plans to shut 16 more of its 47 remaining plants in restructuring and eliminate 21,000 more U.S. jobs.

GM's decision to shut 16 U.S. plants and boost imports to 7% of North American sales has emerged as a sticking point in talks on a new contract with United Auto Workers (UAW). GM needs the accord as part of a plan to chop debt by $44 billion or be forced into bankruptcy soon.

UAW President Ron Gettelfinger and Vice President Cal Rapson met with members of an Obama administration auto task force earlier this month in Michigan to protest the import plans. The union also wrote to senators urging them to prod GM to reduce U.S. plant closings.

Some industry observers say the UAW should seek congressional help in changing GM's import plans. "The bottom line of this whole process is to save jobs in a declining industry," said Gary Chaison, a professor of industrial relations.

On the other hand, GM may be seeking to import more fuel-efficient vehicles to meet the tougher fuel-economy standards. Or it could be GM leverage in negotiations to obtain more concessions as the deadline nears. "This import issue could also be a bargaining chip for GM," Chaison said.

GM CEO Fritz Henderson said the union talks might result in GM ending plans to import models to the U.S. from China.

"Will imports from China survive? I don't know," Henderson said. "I don't think it will be a substantial part of our volume going forward. That's not how we make money."

GM growth in China

GM has more than 20,000 employees in China, where it operates seven joint ventures and two wholly owned enterprises. The automaker said recently that it expects sales to grow 5 to 10 percent this year in the Chinese market.

Shanghai GM, formed in 1997, was the China sales leader in passenger cars (445,709 units) last year, and SAIC-GM-Wuling, formed in 2002, led the mini-vehicle segment (650,508). By comparison, GM reported U.S. sales of about 800,000.

GM's sales in China rose 50% in April from a year earlier to 151,084 units, setting a monthly record. Sales of Shanghai GM rose 34.7% to 55,245 units, driven by its Buick brand's sales of 38,071 units. SAIC-GM-Wuling's sales in April rose 60.6% to 95,544 units.