GM reported set to import cars from China

DETROIT - As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the United States have created a political problem for the automaker and the White House.

The reports, which GM will neither confirm nor deny, could mean trouble because GM is supported by $15.4 billion in U.S. government loans, largely due to the Obama administration's desire to preserve the company's 90,000 U.S. jobs.

The United Auto Workers charged last week that the Detroit automaker intends to almost double over the next five years the number of vehicles it imports to the United States from Mexico, South Korea, China and Japan.

"GM should not be taking taxpayers' money simply to finance the outsourcing of jobs to other countries," Alan Reuther, the union's Washington lobbyist, wrote in a letter to U.S. lawmakers.

The carmaker, which was in danger of running out of cash early this year, faces a June 1 government deadline to cut costs and complete other restructuring measures or go into Chapter 11 bankruptcy protection. It also has requested another $11.6 billion in government loans to make it through this year and faces the prospect that the government will soon be its largest shareholder.

On Wednesday, Shanghai Securities News and other Chinese media reported that GM plans to begin exporting vehicles from China to the United States within two years, ramping up sales to more than 50,000 by 2014.

GM spokesman Tom Wilkinson in Detroit would not comment on the reports. The White House and Treasury Department did not immediately respond to requests for comment.

Harley Shaiken, a professor at the University of California at Berkley who specializes in labor issues, said increased overseas production and imports could prove politically tricky for GM.

"The reason is simple -- production location is a corporate decision, but when it's on the taxpayer dime, there are different sensitivities, so the notion of billions for a rescue package and offshore production, I think, could be politically combustible," he said.

Shaiken said GM needs to lower costs, which is accomplished with cheaper overseas labor. But it must also address concerns of the U.S. government, which wants to preserve American jobs.

"GM is getting funding from U.S. taxpayers to help save the company," Sen. Sherrod Brown, D-Ohio, said. "Taxpayers deserve more than Chinese imports in return. Taxpayer funds should be used to build the next generation of fuel-efficient vehicles in the U.S., not abroad. This is about creating jobs and rebuilding our economy."

GM, though, says the percentage of cars made and sold in the U.S. will remain stable.

Company documents show that American-made cars will constitute 67 percent of all vehicles sold in the country this year. The number drops slightly to 66 percent in GM's 2014 projections. Imports will amount to 33 percent this year, rising to 34 percent by 2014.

The company says the import mix could change by 2014, with fewer vehicles produced in Canada and more produced in Mexico and other countries.

"The percentage sold in the U.S. will stay constant within a percent or two," Wilkinson said. "The number of vehicles built in the U.S. will increase as the market recovers."

He reiterated that the company's goal is to build vehicles in the regions where they are sold, in part to avoid getting stung by currency fluctuations. GM, he said, builds 90 percent of vehicles sold in the U.S. in North America, and that is not expected to change.

Of the 3 million vehicles GM sold in the United States last year, it imported the Chevrolet Aveo and Pontiac G3 subcompacts from South Korea, the Pontiac G8 muscle car from Australia and the Saturn Astra compact from Belgium. The Saturn Vue, Chevrolet HHR small sport-utility vehicles and several pickup truck models were imported from Mexico. Full-size pickup trucks, several sedans and small SUVs and the Chevrolet Camaro were from Canada.

Still, the UAW generally opposes importing vehicles into the United States. According to its figures, the percentage of GM's U.S. sales from Mexico, South Korea, Japan and China will increase from 15.5 percent now to 23.5 percent in 2014.

Reuther wrote that GM's increased imports would be equal to the output of four U.S. assembly plants, "the same number that GM plans to close."

The union currently is negotiating with GM for government-demanded labor cost cuts, including 16 plant closures. At a leadership meeting in Cleveland Wednesday, leaders were told to expect a vote on concessions before June 1.

GM would be the first company to import cars from China, although automakers have brought in components in the past to save on labor costs. Most Chinese automakers have been daunted by meeting U.S. safety standards. They also face the uphill battle of winning consumer confidence for unfamiliar brands.

According to Chinese media reports, the primary exports to the United States would be small cars.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, says it makes good business sense for GM to import subcompacts from China because the U.S. market for them is uncertain, but there is strong demand in China.