May 9, 2009 at 7:02 am

GM plans to shift overseas production

Henderson )

Washington -- General Motors Corp. will shift more production of vehicles bound for the U.S. market to China, Mexico, South Korea and Japan, but will keep total imports at roughly one-third of all sales here.

In a confidential 12-page presentation to members of Congress, obtained by The Detroit News on Friday, GM said it will boost U.S. sales of vehicles built in those four countries by 98 percent -- or about 365,000 vehicles -- while shrinking production in Canada, Australia and European countries by about 130,000 vehicles.

GM also disclosed it will start importing vehicles made in China in 2011, reaching 51,546 vehicles in 2014. Imports from South Korea to the United States will jump from 36,967 vehicles in 2010 to 157,126 in 2014.

The automaker said it is canceling expansion projects in Russia, India and Mexico.

GM's plan to import more vehicles from low-wage countries raises questions about whether it should beef up its foreign operations as it is relying on federal money to stay afloat. It also puts the automaker at odds with the United Auto Workers, which is trying to protect U.S. jobs amid a dramatic restructuring of the domestic auto industry.

GM has faced strong protests from the union that its turnaround plan unfairly targets U.S. workers and plants for cuts. GM plans to trim 21,000 hourly workers and close 13 of its 47 U.S. plants by the end of 2010 as part of a tougher recovery plan sought by President Obama's auto task force. It will close three more U.S. plants by 2014.

GM's production plans are likely to be on the table as the company bargains with the UAW on wage and benefit concessions and how to fund a retiree health care trust as it tries to avoid bankruptcy.

GM spokesman Greg Martin emphasized that none of the $15.4 billion the company has received in federal loans will fund its overseas operations.

The issue is sensitive for GM, which is trying to dramatically shrink its costs amid sharply lower U.S. auto sales. GM lost $6 billion in the first three months of 2009 and burned through $10.2 billion in cash.

The company also disclosed it expects to sell 3.1 million vehicles in the United States by 2014, up from 2,048,000 in 2009 and 2.4 million in 2010.

GM CEO Fritz Henderson met with members of Congress Tuesday and Wednesday and discussed the production plans. His presentation said that UAW plants "share in the growth of volume" in "an equitable way." Henderson plans to brief the media Monday.

"Plant closures in the U.S. are driven by a combination of canceling regional brands (like Saturn, Hummer and Pontiac) and market decline," the presentation said, stressing that the company needs to "build what we sell and can build economically."

UAW legislative director Alan Reuther this week sent a letter to members of Congress critical of GM's restructuring plan.

Reuther complained about the jump in imports from Japan, South Korea, China and Mexico -- noting that the share of GM's U.S. sales from those countries jumps from 15.5 percent to 23.5 percent, equivalent to the output of four U.S. assembly plants.

"We believe (GM) should have an obligation to build in this country the vehicles it will be selling in the U.S. market, thereby maintaining the maximum number of jobs in the United States," Reuther wrote. "GM should not be taking taxpayers' money simply to finance the outsourcing of jobs to other countries."

But GM says it expects that 33 percent of its vehicles sold in 2009 in the United States will be foreign built -- about the same amount as in 2014, when it says it will be 34 percent. Imports hit a high of 39 percent in 2012, before a planned reduction in Canadian production.

GM said Canadian production for U.S. sales will fall from 621,807 vehicles in 2012 to 330,610 in 2014.

Next week the United Steelworkers and the UAW will hold a cross-country bus tour to highlight the issue of domestic auto production.

Michigan members of Congress have urged the Obama auto task force to take the UAW objections into account as they review the GM restructuring plan. GM and the UAW are set to meet in Detroit Monday to discuss health care and labor concessions.

GM said it will still have 31 U.S. plants in 2014, compared with an estimated 21 for Ford Motor Co. and 18 for Toyota Motor Corp.

GM said in April it would announce its plant closing sites sometime this month.

GM predicts the U.S. auto industry will rebound to 16.8 million vehicles by 2014. Through April, 2009 auto sales are at a 9.5 million seasonally adjusted rate.

The automaker plans to reduce foreign production for U.S. sales in Australia, Canada, Sweden and Austria. GM also predicts Mexican production of vehicles to be sent to the U.S. will rise from 317,763 in 2010 to 501,316 in 2014.

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