GM Shanghai Begins Engine Export to N. America
By Bill Visnic and Brian Corbett Ward's AutoWorld, Nov 1, 2003 12:00 PM

As you read this, there's a cargo hold of 3.4L V-6 engines on a not-so-slow boat from China. Their destination: the engine cradles of General Motors Corp.'s all-new '05 Chevrolet Equinox, built in GM's CAMI Automotive Inc. joint-venture assembly plant in Ingersoll, Ont., Canada.

When GM announced in late 2002 its intention to export to North America engines from Shanghai General Motors Automotive Co. Ltd., it raised the antennae of industry watchers.

China's accelerating global manufacturing presence — and the U.S.'s gigantic trade imbalance with China — were matters beginning to draw political and socio-economic battle lines. The notion of the world's largest auto maker sourcing from China the symbolic heart of the automobile created unease.

China's impact on the U.S. manufacturing sector is becoming more of a hot-button, but those involved with the GM Shanghai joint venture engine-exporting project — as well as those supposedly most-affected by it — say it doesn't set a meaningful precedent. It's just business-as-usual in a globalized industry.

That includes the labor union. Dave Binns, president of Canadian Auto Workers Local 88 in Ingersoll, downplays the significance of using a China-sourced engine for a North American vehicle. He says the CAMI facility has produced vehicles with significant Asia-sourced content for years, and so do numerous other North American auto plants.

“I'm certain General Motors workers at plants who produce engines in North America would love the work,” he says. “But that's been the norm here (using non-North American components) at CAMI. So it wasn't like we had a local supplier here who suddenly found himself out the door on this product.”

Patrick Koenigsknecht, GM's program director-China Powertrain Activities, says the 3400 V-6 was developed by GM Powertrain in North America, and the decision to build the engines at Shanghai GM is consistent with GM Powertrain's strategy of maximizing its global production capacity.

The Shanghai GM facility has annual production capacity for 180,000 60-degree V-6 engines, and not all of it is yet being used to supply the domestically made Buick Century and GL8 (powered by 2.5L and 3L V-6s, respectively). Thus the decision to export the Equinox 3.4L V-6 that's based on the same architecture.

Koenigsknecht says it's difficult to say how much engine-making capacity is available at Shanghai GM, because “the China market continues to explode. Every week, the production numbers seem to go up.”

He says for now, the number of 3.4L V-6s exported to CAMI is fluid, “dependent on the success of the vehicle itself.” But he is confident Shanghai GM can handle the export volume for the foreseeable future.

The engine-export project has been under way for about two years, says Koenigsknecht. Video conferencing takes place almost daily. Engineers and other related personnel shuttle from North America to Shanghai on a monthly basis, and GM Powertrain has several employees living in China, working for Shanghai GM. Most stay for about three years.

He says the 3.4L engine is the highest-value single component ever to be exported from Shanghai GM.

Margaret Brooks, Equinox marketing director, also sees the program as a holistic example of global sourcing, rather than a particular line that has been crossed with China.

“Take any product you own: It could be built in a lot of different countries. It's no different than having a Nokia phone built in Sweden or Asia. There are a lot of products (sold in North America) that are sourced from multiple places.”

Brooks, like Koenigsknecht, says the decision to build the Equinox V-6 in China ultimately was the best answer from a manufacturing and capacity-utilization standpoint.

“It made sense to use the existing capacity base to best utilize GM's total system,” she says. “The customer really doesn't care, and it's not really a different (strategy) than we've proven in many other products.”