GM rebuffs critics on China spendingGeneral Motors, profitable for 13 consecutive quarters, is planning to invest about $16 billion in U.S. factories and facilities through 2016, more than it will spend in China, the company said.
“The $11 billion in capital that will be spent in China by 2016 is coming out of our joint-ventures rather than Detroit and is far less than the approximately $16 billion in capital GM will invest in the U.S. over that time,” Selim Bingol, GM vice president of public policy, said in a letter published in the Wall Street Journal.
GM disclosed the U.S. investment figure after announcing the $11 billion investment for its joint-ventures in China last month in Shanghai. That was an increase from a 2011 outline to spend $7 billion through 2015. GM through its joint-ventures sold 2.84 million vehicles in China, its biggest market, last year and wants to boost that to 5 million by 2015.
The Journal last week ran a commentary on its op-ed page titled, “Welcome to General Tso’s Motors,” saying China “is disproportionately benefiting” from the 2009 U.S.-backed bankruptcy reorganization of Detroit-based GM. The Journal’s editorial page previously has criticized the bailout.
GM “was in China long before the economic meltdown of 2008-9, and not one dollar of U.S. taxpayer rescue money was spent on our operations there,” Bingol said in the letter. “Our Chinese joint-ventures are self-funding, meaning we require funds spent there to be generated there.”
The U.S. spending plan ties in with Chief Executive Officer Dan Akerson’s strategy to boost operating margins to 10 percent in North America by mid-decade from 7.4 percent the past three years. GM is introducing about 20 new or refreshed vehicles in the U.S., part of a plan to increase profits and rebound from last year’s 88-year low in U.S market share.
“Our investments in the U.S. and China reflect our determination to remain No. 1 in the world’s top two markets,” Greg Martin, a GM spokesman, said last night.
GM has said it invested $8.5 billion in the U.S. since emerging from bankruptcy, including efforts to prepare for production for more fuel-efficient engines and vehicles.
GM has 31 facilities in the U.S., Martin said. That includes 12 assembly plants, according to GM’s Web site. With its China investment, GM is increasing its number of assembly plants to 17 assembly plants, Bob Socia, the automaker’s China president, said last month. The total number of facilities in China will be 30 in 2016, GM said.
The company on May 2 reported that first-quarter net income fell 11 percent to $1.18 billion from a year earlier. Profit excluding one-time items was 67 cents a share, surpassing the 54-cent average of 16 estimates compiled by Bloomberg.
Profit in North America before interest and taxes slipped to $1.41 billion during the quarter from $1.64 billion a year earlier. Profit in international operations, which include China, slipped to $495 million from $521 million a year earlier.
“If you look at their profits, obviously, the U.S. market” remains “a major profit center,” said Alan Baum, analyst at Baum & Associates in West Bloomfield, Michigan. The automaker’s shares gained 11 percent this year through May 3 compared with a 13 percent increase for the Standard & Poor’s 500 Index. Bloomberg
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