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GM Boosts U.S. Manufacturing Investment; Shuts Down in Australia

Posted By Paul Tate, December 17, 2013 at 6:46 AM, in Category: Redefining the Supply Chain

When General Motors’ new CEO Mary Barra takes over the leadership reins from Dan Akerson on January 15 next year, she will inherit a company with a renewed focus on U.S.-based manufacturing.

Yesterday the company announced plans to invest another $1.3 billion in five of its Midwest U.S. production plants - in Detroit, Flint, and Romulus, Mich., Toledo, Ohio, and Bedford, Ind. The funds are aimed at improving the plants’ facilities so they can focus on building more fuel-efficient engines and transmissions, streamline logistics, and enhance vehicle quality. The move will also create or safeguard around 1,000 U.S. manufacturing jobs.

This latest cash injection brings GM’s total U.S. production investment to $2.8 billion this year, and $10.1 billion since its government bail out in 2009. But while this will certainly make U.S. manufacturing advocates happy, the same can’t be said of their counterparts in Australia.

Last week GM also announced its intention to close its Holden unit, Australia’s largest carmaker, in 2017 after 69 years in the country. High costs and the strength of the Australian dollar makes local production on average $3,423 more expensive to build cars there than in overseas plants, according to recent Holden submissions to a government inquiry into the future of the local auto sector. 2,900 jobs will go at the company’s plants in South Australia and Victoria. However, GM will maintain Australian sales operations, parts distribution and a design studio.

Ford announced plans to pull out of the country in May this year, and it now looks like GM’s decision may have an even worse knock-on effect for the auto sector down under.

Bloomberg quotes a statement from Australia’s last major car manufacturer, Toyota, that the GM move is likely to “place unprecedented pressure on the local supplier network and our ability to build cars in Australia”.  The Japanese company added that it will now have “to determine our next steps and whether we can continue operating” in the country.

Do you expect to see more examples of leading manufacturers re-balancing their global production footprints and redefining their supply chains in the year ahead?

 



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Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive



Comments

Posted on
This is a great news. Not only it helps in increasing revenue, but also helps the two aspects. First, it will help in increasing employment and secondly it will help in other niche business to grow. Businesses like automotive parts will also get a booster. Being a vibratory feeders providing company for automobile sector I feel it worth.
Posted on
Thanks for your comment Craig. The US auto sector certainly appears to face a far brighter future than just a couple of years ago. 
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