I hope ACHI is going to be a North American low cost producer to help combat the following article. ACHI seems to be in the right place at the right time. Now if we can just start knocking down ducks!!!
Will Chery be Detroit's new nightmare?
Quality car at a low price could shake auto industry to its foundations when it arrives in 2010, analysts say
GREG KEENAN
From Thursday's Globe and Mail
July 5, 2007 at 3:50 AM EDT
Small cars made in China and bearing the Dodge or Chrysler name will begin arriving in North America in 2010 in what will be a watershed moment for an industry that employs hundreds of thousands of people in Canada and the United States and generates tens of billions of dollars in wealth.
The newly independent Chrysler Group signed a deal yesterday with Chery Automobile Co. of China to develop subcompacts and other small vehicles that will be sold in Latin America and Eastern Europe next year and the more demanding markets of North America and Western Europe in a little more than two years.
If Chrysler and its Chinese partner are able to deliver to developed markets a high-quality car at low cost - less than $10,000 (U.S.) - the auto industry will be shaken to its foundations, analysts said yesterday.
"It challenges global trade patterns" and has the potential to create massive job dislocation in high-cost countries with long-established vehicle manufacturers, one automotive observer said yesterday.
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"You're talking about an industry that is a core industry in a whole bunch of countries," the analyst said.
The Chrysler-Chery linkup has worried and angered Canadian Auto Workers president Buzz Hargrove for some time. Mr. Hargrove fears the successful export of small cars will lead to auto makers building bigger vehicles in China and shipping them here.
"Why wouldn't they?" he asked yesterday.
That potential strategy of low-wage workers in China building mid-sized cars, pickup trucks and sport utility vehicles to be shipped into Canada and the United States is a nightmare scenario for the CAW president and his United Auto Workers counterpart Ron Gettelfinger.
The union leaders have already watched the Detroit Three abandon the subcompact market only to see Chrysler and General Motors Corp. [GM-N] re-enter it with vehicles built outside North America at a time when they are slashing tens of thousands of jobs here.
Mr. Hargrove reiterated his call for a North American auto pact that would require China, Japan, South Korea and other countries to match their imports from North America with their exports from home markets.
Although Chrysler and Chery have been in talks on a deal for months, the signing ceremony in Beijing yesterday came on the eve of the opening of contract talks that Chrysler and its Detroit rivals Ford Motor Co. [F-N] and GM will hold this summer with the UAW in the United States.
The companies have warned privately that unless they can dramatically reduce a labour cost disadvantage of $25 an hour versus their Asian competitors in North America during these talks, they will shift more and more investment offshore.
The number of vehicles produced in North America by members of the CAW and UAW fell by two million between 1995 and last year, according to new research by auto analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. of Richmond Hill, Ont.
Members of the two unions produced just 56 per cent of the 19.9 million vehicles sold in North America last year, compared with 79 per cent of the 16.5 million sold on the continent in 1995.
Chrysler chief executive officer Tom LaSorda, in whose parents' basement Mr. Hargrove plotted union strategy in the 1960s and 1970s, has said the auto maker cannot manufacture a subcompact profitably in Canada or the United States. "As part of Chrysler's global transformation, we are finding new ways to bring vehicles to market - faster, more efficiently, with less costs and the same high-quality standards," Mr. LaSorda said in Beijing yesterday.
The deal with Chery will fill a major hole in the lineup for Chrysler, which has no subcompact as the North American market shifts to smaller vehicles amid soaring gas prices.
Chery, the fourth-largest car maker in China, sold 305,000 vehicles last year, of which 50,000 were exported.
Mr. Hargrove insisted that small cars can be built at a profit in North America and pointed to a radical labour agreement the CAW offered Ford if it agreed to build a new plant in St. Thomas, Ont., to produce subcompacts.
THE CHANGING FACE OF AUTO MANUFACTURING
$73
Average amount unionized assembly line workers make per hour in the United States, including benefits (U.S. dollars).
83¢
Amount in U.S. dollars that Chinese auto maker Chery says it pays assembly line workers per hour, a total of $132 a month. |
