Doran Chan - 7669

AMM103. 0075 Concentration GM Concentration

3/25/2006

One of the main reasons why manufactures outsource their job is the cheap labor. The GM recognizes some of their flaws in outsourcing to Europe were too late to be saved. The GM Europe to Get a Major Tune-Up by Stephen Power discuss the systematic problems which other manufactures face in outsourcing. The GM faces three common problems in Europes law, substantial net loss, and lack of organization skills has brought the corporate shares down. As we observe the manufactures outsourcing their job cause more cohesion than a robust net income. Operating overseas has many unforeseen legal issues due to lack of proper research by sloppiness homework. But Mr. Lutz warned that the countrys social policies may cost the nation its fabled status as a hub of automobile production. (Power) Both Chancellor Kohl and Mr. Lutz complain about the German Labor Policy that they have the shortest working week, the lowest number of working years, and the shortest machine operating time. The policy resembles somewhat as an anti-corporate labor law in the eyes of corporate. German possesses the highest number of shareholders in their economy withholding their productivity potentials while retaining high quality products. Germany has over two million foreign employers in their economy showing healthy signs of growth. Yet GM reported a net loss of $286 million in their 2003 annual report. (Power) The German wage cost is sixty percent more than the average European wages affected GMs wage to sky rocketing upwards. Outsourcing in Germany sounds like it lost its true concept of obtaining quality product through cheap labor. In addition, of the continuing pricing pressure from the world economy forced GMs expenses to increase. Statistics estimated that cost increase by ten percent every three years in Germany. In GMs 2004 First Quarter Report stated net loss of $116 million nearly doubled from 2003. Surely, with all the bad events there should be a correlation to it. The GM Europe senior management had three small car companies, Saab, Opel, and Volkswagen, that are all autonomous. Engineers at the company Saab unit, for example, are completely separate from their counterparts at Opel, developing separate wiring harnesses, air conditioning and suspension systems on vehicles essentially based on the same architecture as certain vehicles made at Opel. (Power) All three sub-organization are duplicates funded by GM Europe, which portrays no coordination whatsoever. In the end, it withheld GM Europes true potential through unnecessary expenditures on duplicate human resources. The GM faces three common problems in Europes law, substantial net loss, and lack of organization skills has brought the corporate shares down. Europes laws have certain limitation on the economic productivity. The on going concern of increasing cost at GM Europe cause a net loss and continuing rise. The senior management also failed to foresee what the operations of their sub-organizations. In my opinion, the senior management is a parasite to GMs capital. The failed to conduct themselves as professional manages but want to held top positions without raising a muscle. Id say shut the plants down and return the manufacturing job to United States where its more safe. 1 of 1