GM will release each car in only three to four basic colors: Walmart blue, silver, white, and black. Car models shown above are the Chevy Express Van, the Chevy Cobalt Coupe, the Cadillac CTS, the Pontiac G5, and the Saturn ASTRA. Other models will also be sold.In a surprise move, American auto maker General Motors Corp. announced at a press conference today that it will be relocating to China as a cost-cutting measure, expecting to save the company fifty percent in production costs.
Former CEO, Rick Wagoner, will also be rehired as Director of Chinese manufacturing operations. Wagoner, who was asked to step down by the Obama Presidential administration on Monday, has currently been retained by the Board of Directors as a consultant, but was not present at the press conference. “Wagoner has some great ideas to save money,” says GM President, Frederick A. Henderson, “We can’t implement these cost saving measures here at home. We have no choice but to move overseas.”
Wagoner, who was taking some “R and R” time off at Cocoa Beach, stopped to talk to reporters during his vacation.
“With benefits, auto workers cost $55 per hour here in the United States. By moving to China, we can pay as little as $2 per hour for the same work. This will save us roughly $1,300 per car alone,” explained Wagoner.
The move is slated to happen in late June when the company will begin shipping their auto manufacturing equipment to China. “We gave the union their notice today,” grinned Wagoner.
Plant closures across North America are expecting to lay off 148,000 employees in the United States and 12,000 employees in Canada. “We’re keeping the factories open in Mexico for now,” said Henderson. These employ roughly 13,000 people.
Most American based jobs are located in northern states, such as Michigan, which will lose 54,459 jobs alone.
However, Governor Charlie Crist said that even Florida will feel the impact of the layoffs. “When you think of auto workers, you think Detroit. But distribution and manufacturing facilities are spread out all over the country, including one in Jacksonville where I’ve been notified that 111 employees will lose their jobs.” 1,098 employees will also be laid off from the Doraville, Georgia facility; 96 from the Jackson, Mississippi facility; and 1,975 from the Shreveport, Louisiana facility.
“Other than labor, there are other savings we’ll reap by moving to China,” said Wagoner. “Raw materials are cheaper. Even the building costs are extraordinarily low,” he explained. “And there’s less bureaucracy to slow down production.”
Cal Rapson, United Auto Workers vice president director for the GM unit, said he was disappointed that GM was moving out of the United States. “This reflects a common trend in manufacturing. They really don’t save that much off the cost per car by using non-union labor, so there must be another reason they’re moving,” he added.
Rapson says he assumes that Wagoner is hoping to cut corners on expensive safety standards. “Not just for the workers, for the final product,” he says. “You won’t know if a car was built correctly with air bags and crash resistant door pillars until you need them and they don’t work,” said Rapson. “Buyers underestimate what union workers do. They care. They’re the eyes and ears of the industry making sure products are safe. They buy them for themselves, their family. Their kids ride around in the cars, so they care. That’s a bargain, if you ask me,” he said.
Despite criticism that GM cars are gas guzzlers, Waggoner announced that GM does not plan to make cars any more energy efficient. “As long as gas prices are low, people like to buy big cars. We give the people what they want,” he said.
Bo I. Andersson, GM Group Vice President, said that GM plans to save additional costs by the slow and gradual phase out of local car dealerships. “Dealers represent about fifty percent of the sticker price,” he said. “We want to eliminate that.”
Andersson said the idea had been circulating for a long time, but it took desperate times to bring it to fruition, “Buyers we surveyed said they would be willing to trade personal service for a lower price,” said Anderson. “Most of them know what they want to buy before they even walk on the lot. They don’t want to haggle with a salesperson. They want to go in, pay their money, and drive out.”
Andersson said Walmart was the perfect choice for GM. “They already deal with a great deal of manufacturers in China. Their system is streamlined and efficient to keep costs low. They specialize in customer service,” he added, “And, they’re successful.” Walmart stock was trading at 52.10 per share yesterday, compared to 1.94 per share for GM.
“We’ve been testing the waters,” said Andersson, who said that a test sales outlet, Live X Auto Exchange in a Phoenix, Arizona Walmart, has been in place since October 2008. “We kept it quiet, sold other cars as well as GM so as not to alert the dealers that this might be coming down the pipeline.”
No dealers were present to comment. “We haven’t hammered out the details, yet. We’ll offer them some sort of compensation,” said Henderson.
Walmart spokesman, Gregory B. Penner, who serves on the Board of Directors and on the Strategic Planning and Finance Committee, said that Walmart is looking forward to working with GM. “This was a surprise to us, but we’re happy to accommodate them. They build quality cars.”
Penner said that only a small number of cars will be stocked at each Walmart store, “mostly for display.” He explained that most vehicles will be stored offsite at a warehouse, “but available at a moment’s notice,” he said. “When someone buys a car, GM will flatbed-tow it to the Walmart by the time the paperwork is filled out.”
Penner said that a special in-store boutique will be established within one Walmart store in each major metropolitan or regional area by January of 2011. “Similar to the optical shop,” he said. Buyers will place their order at the counter, process their payment, and fill out necessary paperwork.
“Loans will be handled through GM,” added Henderson.
“That was a condition,” said Penner. “GM can make more money on interest than on the car itself,” he said.
Andersson also said some products will change. “To keep inventory low, we won’t offer options. Every car will be built basically the same with all the same bells and whistles. It’s cheaper to just put every feature on every car.” OnStar, the safety feature which allows drivers to push a button for directions, will be included on each car.
GM will reduce it’s array of eight colors per model and instead, offer each vehicle in three basic colors of black, silver, and white.
Other colors will only be available on select models or for promotional purposes. “Such as buying a cherry red Chevy Cobalt for your wife on Valentine’s Day,” explained Andersson.
“Walmart blue will be offered on most family car models,” added Penner.
Test drives will not be available at Walmart stores. Instead, vehicles will be showcased at traveling expositions, “similar to the county fair,” said Andersson. Vehicles will also be available as rental cars “so that buyers can truly test drive a car over several days.”
Service will continue to be performed by certified GM mechanics, but at local shops where independent mechanics can attend a school to be certified. Parts for fix-it-yourselfers will be sold exclusively through Walmart.
With all the cost cutting measures, GM expects to save about sixty five percent of the sticker price.
However, consumers can only expect to save about ten percent. “We can lower prices slightly to be competitive with the other car makers, but actually make a higher profit in the long run,” said Henderson.
(If you haven’t figured it out yet, Happy April Fools Day! Most numbers are real or based on calculations of actual car production costs, employment numbers, etc. All interviews were manufactured for this scenario and I apologize in advance for putting actions and words in people's mouths. But, this could happen. Think about it! – Smart Spark)
