: GM pushes its suppliers to tap China

04-07-05, 12:51 PM
A so-called global purchase price that GM and other companies seek is the lowest price available anywhere, said John Henke, president of Planning Perspectives Inc. and marketing professor at Oakland University.

Getting a global purchase price on labor intensive components often requires dealing with suppliers located outside the United States, he said.

"Simply because of wage structures around the world, you'll go to places like Mexico, China and India to get the best price on anything," Henke said.

The exodus of parts suppliers to countries where labor costs are cheaper is well underway and not likely to abate before the end of the decade.

North American auto suppliers will close plants and move as much as 20 percent of their production to lower-cost regions by 2010, according to a survey conducted last year by Roland Berger Strategy Consultants in Troy.

Some parts can be produced 20 to 40 percent cheaper in China and other low-cost regions than they can North America, experts say. (http://www.detnews.com/2005/autosinsider/0504/07/A01-142812.htm)