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GM expanding white-collar work outsourcing to cut costs
Detroit, Mar 24: As part of sweeping cost-cutting efforts, General Motors Corp.`s (GM) manufacturing arm plans to shift an increasing number of white-collar work overseas, according to an internal company report.
Detroit, Mar 24: As part of sweeping cost-cutting efforts, General Motors Corp.'s (GM) manufacturing arm plans to shift an increasing number of white-collar work overseas, according to an internal company report.
The latest spending plan outlined in the report represents less than 1% of GM's global manufacturing budget, said The Detroit News, which obtained a copy of the report.
The news comes as Gov. Jennifer Granholm signed two executive directives giving preference for state contracts to Michigan-based companies that employ American workers. The governor's decision is aimed at stemming the loss of manufacturing jobs in the state and creating new ones.
"In 2003, we began offshoring activities moving $3.5 (million) of work to lower-cost locations," the report said, "and we are planning to increase that to $48 (million) in 2004." The report, titled "2003 Vehicle Operations" is an annual review of GM's manufacturing organization by Gerald Elson, GM's vice president and general manager of vehicle operations.
Along with the offshoring initiative, Elson also discusses several other cost-cutting targets such as reducing overtime by 15%, slashing energy and water use and buying more robots for manufacturing plants from diverse sources worldwide. The report says such efforts could reduce costs by 42%. Most of the white-collar work sent overseas has gone to Canada. About $200,000 in work has been sent to India, GM said. In 2004, Canada will again receive most of the work, while India will receive slightly more than the previous year. The work involves tasks not currently done by American workers.
GM officials said the amount of work being outsourced won't displace American workers. "The amount of work that is being considered to be moved represents a very small fraction of the total multibillion dollar operating budget," GM spokesman Dan Flores said. "The work ... is not being done in the United States or done anywhere."
Flores said the measure is intended to allow the automaker to develop local expertise in overseas markets where it does business.
Analysts say GM's plan is part of broader cost-cutting efforts in the auto industry, such as setting up joint ventures. "Offshoring is necessary and it's not evil," Comerica Bank chief economist David Littmann said. "It's an absolute necessity if you're to serve a choice and competitive-minded public and without it most of those auto companies would be gone."
Bureau Report
The news comes as Gov. Jennifer Granholm signed two executive directives giving preference for state contracts to Michigan-based companies that employ American workers. The governor's decision is aimed at stemming the loss of manufacturing jobs in the state and creating new ones.
"In 2003, we began offshoring activities moving $3.5 (million) of work to lower-cost locations," the report said, "and we are planning to increase that to $48 (million) in 2004." The report, titled "2003 Vehicle Operations" is an annual review of GM's manufacturing organization by Gerald Elson, GM's vice president and general manager of vehicle operations.
Along with the offshoring initiative, Elson also discusses several other cost-cutting targets such as reducing overtime by 15%, slashing energy and water use and buying more robots for manufacturing plants from diverse sources worldwide. The report says such efforts could reduce costs by 42%. Most of the white-collar work sent overseas has gone to Canada. About $200,000 in work has been sent to India, GM said. In 2004, Canada will again receive most of the work, while India will receive slightly more than the previous year. The work involves tasks not currently done by American workers.
GM officials said the amount of work being outsourced won't displace American workers. "The amount of work that is being considered to be moved represents a very small fraction of the total multibillion dollar operating budget," GM spokesman Dan Flores said. "The work ... is not being done in the United States or done anywhere."
Flores said the measure is intended to allow the automaker to develop local expertise in overseas markets where it does business.
Analysts say GM's plan is part of broader cost-cutting efforts in the auto industry, such as setting up joint ventures. "Offshoring is necessary and it's not evil," Comerica Bank chief economist David Littmann said. "It's an absolute necessity if you're to serve a choice and competitive-minded public and without it most of those auto companies would be gone."
Bureau Report