GM plans to increase part purchases from China
General Motors plans to rapidly expand parts sourcing from China.
Reports from both Dow Jones and Reuters quoted remarks from Bo Andersson, vice president of global purchasing and supply chain at GM, as saying Friday the company has been on track to increase the value of purchases by 25 percent per year from 2005 through 2010.
Andersson reportedly said GM buys 20 million parts a month from 190 Chinese suppliers, and that China was beginning to make more sophisticated parts that GM has sourced elsewhere. The company now buys aluminum wheels, plastic and electronic parts. Andersson was quoted as saying the company will start buying parts for air conditioners, chassis, steering wheels and brakes.
A report last year by the Congressional Research Service (CRS) said, “Chinese auto parts exports are already making inroads into the United States. While U.S. motor vehicle trade with China was insignificant in 2005, the United States imported $5.4 billion in parts from China, while it exported about one-tenth of that amount.”
“China accounted for about 6 percent of U.S. auto parts imports in 2005, but the amount has quadrupled since 2000,” said the report penned by Stephen Cooney, a CRS industry specialist. “Many of these imports are aimed at the aftermarket, as most of what China now exports to the U.S. market are standard products such as wheels, brake parts and electronics.
“But with high rates of investment in China by the leading U.S. manufacturers of both cars and parts, major companies such as GM look to increase sourcing from China,” Cooney said.
In April 2006 at a conference organized by the Federal Reserve Bank of Chicago, GM’s Andersson gave a presentation that showed GM sourced only a tiny amount of parts from China, about 1 percent or about $500 million per year for GM cars built in North America, compared to 67 percent from the United States, 16 percent from Mexico and 14 percent from Canada.
China was even a smaller supplier to GM in other parts of the world, according to that presentation. In GM’s Asia-Pacific region, Andersson said in his presentation at the Chicago Fed that China supplied 0.1 percent of parts, compared to South Korea’s 60.8 percent and Australia’s 29.9 percent.