General Motors Corp. has a purchasing team in South Korea investigating ways to export parts from new equity partner Daewoo Motor Co. Ltd.'s suppliers to other GM operations around the world, Vice President Bo Andersson says.
The worldwide purchasing executive says a dozen people are spending 90 days in Korea looking at opportunities to export parts to Europe, Mexico and Canada. “Our least priority is the U.S., first taking care of Europe, Brazil and then Mexico and Canada.” Those are regions that favor small cars — Daewoo's expertise — and where GM is facing the most intense cost pressures.
Tires, starters and seat frames are some of the components that may be exported. In addition to Daewoo, GM's worldwide purchasing operations buy for partners Fiat Auto SpA, Isuzu Motors Ltd., Fuji Heavy Industries Ltd. (Subaru) and Suzuki Motor Corp.
GM agreed in April to purchase certain assets of bankrupt Daewoo (see p. 52). Daewoo has about 240 suppliers, most of which are new to GM. Given the protectionist reputation of South Korea, GM has been surprised to discover the large number of Chinese suppliers used by Daewoo.
“Korea is in my view somewhat protectionist,” Andersson says. “If you look at the Korean success (story), it's been very much them taking care of their own companies. Korea's Tier 1 supply base (represents) $17 billion in turnover.
“(But) we were surprised,” he adds. “They imported more than we expected. A lot of the Tier 2, Tier 3 parts were manufactured in China.”
For complete transcripts of the purchasing interviews, see www.wardsauto.com
