Monday, December 8, 2008 - Page updated at 12:00 AM
RALPH ORLOWSKI / GETTY IMAGES
Employees of German carmaker Adam Opel GmbH, a General Motors subsidiary, work on a new Opel Insignia car at a production plant in Germany. GM has more workers outside the United States than in it.
GM cars popular — and profitable — outside U.S.
Los Angeles Times
Nearly three-fifths of General Motors' employees make cars that are admired, popular and profitable.
They just don't work in the United States.
GM has a bigger presence and employs more people outside the United States than in it, and actually makes money selling cars around the globe. Its U.S. revenue has sunk 24 percent in the past three years, but in the rest of the world, GM can boast a 28 percent increase.
Now, as U.S. lawmakers mull whether to provide billions of dollars in loans to keep the firm afloat, its global reach has become its most overlooked asset and a key to its ultimate survival.
"A major argument for keeping GM out of bankruptcy is the strength of its foreign footprint," said Kimberly Rodriguez, of accounting and management consulting firm Grant Thornton.
Yet because of the deeply intertwined nature of GM's global operations, if the company goes down in the United States, she said, "there will certainly be problems for the company worldwide."
GM's international units are separate corporate entities, which means they would likely be shielded from a U.S. bankruptcy filing and could continue to operate without concerns of a U.S. court seizing their assets.
But if the automaker's U.S. operations fail, as GM says they will without an immediate cash infusion, it could set off a chain reaction that would not only put U.S. parts suppliers out of business but also could throw off production schedules overseas and freeze up GM's foreign plants.
That, in turn, could have a ripple effect on its overseas competitors.
"I am very concerned about GM because we share suppliers with (GM subsidiary) Opel," said Klaus Berning, head of sales and marketing for Porsche, which produces all of its vehicles in Europe.
Through the first nine months of 2008, 4.3 million of the 6.7 million cars and trucks GM sold — nearly two-thirds — came outside the United States. And of the company's 252,000 employees, 152,000 work abroad, building Chevrolets, Opels, Vauxhalls, Holdens and Buicks in 33 countries.
"Those overseas businesses over the last several years almost uniformly have been quite profitable, and they have, in almost every case, been able to send dividends back to help us address funding issues in the U.S.," GM CEO Rick Wagoner told a House committee Friday.
For example, the automaker's Chinese operations include 11 plants and roughly 20,000 employees, not to mention a $250 million research campus in Shanghai.
Five years ago, GM made almost no cars in China and it sold roughly twice as many cars in the United States as it did in the rest of the world.
But with a rising middle class fueling demand in countries like Brazil, India and Russia, GM and other automakers see a golden opportunity for meteoric growth. And they are getting an assist from foreign governments eager to develop industry.
In the United States, the Big Three face crushing health-care costs and restrictive dealer-franchise laws, and are burdened with a factory network built to produce the gas-guzzling sport-utility vehicles now collecting dust on dealer lots.
Abroad, however, GM operates clean and lean — paying competitive salaries, benefiting from government-paid health-care coverage and producing small, economical vehicles geared to those markets.
To stave off a collapse, GM recently proposed selling off brands, reducing production and eliminating tens of thousands of jobs. And although its international picture is brighter, it's not immune from global slowdown.
GM laid off 1,000 workers in South Africa this year, spokesman Pat Morrissey said, and idled production for several weeks in Brazil and Argentina.
In Russia, sales of Chevrolets were up 32 percent through October but have fallen as of late, while overall industry sales in China fell 10 percent in November compared with a year ago.
In Eisenach, Germany, GM's Opel unit made a record 180,000 cars last year and was hoping to top that record this year. But with sales flagging, the company was forced to furlough workers for three weeks.
Copyright © 2008 The Seattle Times Company
