GM Brazil to Invest R$2B in Expansion and New Line of Chevrolet Small Cars
16 July 2009
General Motors Brazil will invest R$2 billion (US$1.033 billion) to launch a new Chevrolet line of vehicles and to expand its plant in Gravataí, Rio Grande do Sul. The investment is the largest made by the company in its 84 years in Brazil.
Included in the investment program is the renewal of the current line of Chevrolet vehicles in 2012, and the launch of a new line of small cars (two models) for Brazil and emerging markets—“Project Onyx.”
About R$1.4 billion will be invested in the development of the new vehicles and in the Gravataí plant, which currently produce the Celta and Prisma. The remaining $600 million will flow to GM’s other operations in Brazil.
With the new investment, the Gravataí plant will have a capacity of 380,000 units a year within three years, more than tripling the initial installed capacity of 120,000. The two new models of Project Onyx are scheduled to reach the market from 2012.
This will be the second expansion to Gravataí. In 2005 and 2006, it received investments of about US$480 million, resulting in the launch of the Chevrolet Prism in October 2006 and the expansion of its production capacity to 230,000 vehicles per year.
Funds for the investment will partly come from the company’s cash flow and retained earnings in recent fiscal years—GM Brasil has been profitable since 2006. The company will also reviewing funding of R$344 million and is in negotiations with BNDES and BRDE (Banco Nacional de Desenvolvimento Econômico e Social and Banco Regional de Desenvolvimento Econômico) for new capital.
The engineering and design centers located in São Caetano do Sul and Indaiatuba will have full control of the development cycle of any of the vehicles. Brazil is one of five major GM global centers of development.
In 2008, GM Brazil recorded record annual sales of 548,941 vehicles, with Chevrolet leading in four segments. GM was the first company in the Brazilian automobile sector to produce 100% of their vehicles (except for the diesel driven) with the flex fuel supply system.
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"GM Brasil has been profitable since 2006..."
Of course! GM Brasil doesn't have to deal with the United Auto Workers Union, and the Obama/Reid/Pelosi administration bankrupting (spend, spend,spend!!!) and regulating to death our country.
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Posted by: The Goracle | 16 July 2009 at 02:38 PM
Why does GM management change from "incompetent" to "enlightened" when they go outside the US?
Must be what's in the US. Maybe labor costs?
Why do they make small cars outside the US?
Simple - Must be because of the language barrier - GM brainwashing does not work in foreign languages.
It's all very simple really, very simple.
Posted by: ToppaTom | 16 July 2009 at 03:09 PM
Mercedes and BMW work with a MUCH stronger union than the UAW. It might be good to find the real cause of failure...maybe management?
Posted by: SJC | 16 July 2009 at 03:42 PM
No, not management.
However strong German labor laws and unions might be (or not) they are not the UAW. Can you see a pattern below?
Auto Maker ……Mmgmt .. ….Union ….. Health
Chry………..…..Chry……...…….UAW …. Poor
GM………..….. .GM…………......UAW ….. Poor
Ford ……….…..Ford……...…….UAW …....Poor
Toyota US …….Toyota……..…None ….....~OK
Honda US…….…Honda …..… None ...….. ~OK
BMW ………..…..BMW ……....IG Metall . ~OK
MB …………....…….MB ………… IG Metall ..~OK
Any Japanese ….Japanese … None ,, …. ~OK
Posted by: ToppaTom | 16 July 2009 at 07:53 PM
TT:
Many people are inclined to believe that UAW was very successful in their efforts to bankrupt the Big-3. The New GM + Chrysler will not last very long if most of their manufacturing activities are not moved out of USA-Canada where UAW is all powerful.
UAW members (and many managers) deserve to be unemployed for many years.
Future affordable cars may have to be imported or locally built (final assembly only) without UAW members.
That's what happened to the electronics (and appliances)++++ industries.
Posted by: HarveyD | 17 July 2009 at 08:49 AM
You can't blame all on unions or management. These days cheap labor demands manufacturing move - except the smart people are catching on. Keeping the economy local as in building new manufacturing facilities domestically pays off in the long run. So, corps have to look at the longer term advantage of not running overseas. Investment at home is good nationally for jobs, economy, quality, enviro, etc.
Unions and management are getting the message: there's A LOT of competition now. Get real or get out of work. Electrification of transport is being led by U.S. technology. GM and Volt are leading the U.S. right now.
Posted by: sulleny | 17 July 2009 at 10:24 AM
I agree.
Though the UAW may not have wanted to bankrupt the Big-3, they were major a contributor.
Indeed, the electronics and appliance (and Camera, TV, Camcorder, Clothing, Furniture, Steel, toy, tool, factory machinery) industries have mostly gone overseas.
Cars are just about the last, and may be destined to be imported or locally assembled.
I have little patience with the claim that “the Detroit management was incompetent”.
I view it as a corollary to “Detroit did not build cars people wanted”; which is simply laughable.
I am not sure that keeping the economy local (building new manufacturing facilities domestically) pays off and will win in the long run.
We had that, it was local, and now much is gone and most of the rest is still going.
I really hope and wish local economies were coming back; but wishing and hoping does not make it so..
Investment at home is good nationally for jobs, economy, quality, enviro, etc.
And good always wins – doesn’t it? - I wish.
Someone on NPR was alleging that fuel costs will end imports and even big stores (Walmarts) out in the Burbs.
I would accept small goods doubling (quadrupling?) in price if it brought back the little stores with local goods – three chances of that happening; fat, slim and none.
Posted by: ToppaTom | 17 July 2009 at 01:53 PM
I took a semester off in college and worked on assembly line making car parts that got shipped to the big auto plants for just-in-time assembly...it was a non-union shop, but the general concept was the same - churn out mass amounts of parts in a team environment with oversight by the engineers that would come out of their air-conditioned offices every now and then. The folks on the assembly line aren't designing parts or the machines that make the parts, and they're not running focus groups to see what customers tastes are either. They're putting raw materials into machines that produce parts designed to specs established by the engineers and management...the UAW bashing isn't warranted in my mind...the big 3 need to have higher standards & require better materials and fit & finish for vehicles, which in turn forces suppliers to provide pieces and parts to higher standards from better machines --- the japanese figured this out decades ago.
Posted by: ejj | 17 July 2009 at 07:18 PM
I have worked in non-union shops and toured a number of union plants.
The engineers in the non-union shop stayed in their air-conditioned offices at their own peril – they were not fire-proof.
The engineers in the union plants went out of their offices at their own peril.
As a customer in the union plants, I was a source of anxiety – if I picked up a part to look at, there might be a grievance filed – I was not authorized to move parts, nor was the machinist allowed to move parts or fix certain minor malfunctions in his lathe; maybe he was allowed to reset the circuit breaker.
Posted by: ToppaTom | 17 July 2009 at 08:50 PM
Actualy the car makers warned you this would happen decades back when the union contracts were hammered out and nafta came about.
They knew back then the combo of red tape tax break fueled inflated wages union dues in elections and the general stupidity rampant at the time would result sooner or later in a downturn that would break the system.
In fact the timing was even forecast 30-40 years ago. But we are all "shocked" it happened.. which is to say none of us was.
Posted by: wintermane2000 | 17 July 2009 at 09:24 PM
Good point Toppa...the union job-protection ahem - "safety" rules can create more problems than they solve.
Posted by: ejj | 18 July 2009 at 08:07 AM
I wonder what the future holds.
GM is now free of much of the UAW burden.
They are owned by the US (61%), the UAW (17%), Canada/Ontario (12%) and the old shareholders (10%). Will this help?
If they are left alone, to put away their inefficiencies, they will surely vanish before they can catch up.
If they are supported by the US Treasury they will probably shed such problems as cheap interiors at the last minute to meet $$ targets.
Then they will quit cost cutting in the other stages and make cars like Ma Bell made phones before de-regulation – - durable - high quality but way too expensive for the free market.
Or they will cast off the bad practices and become lean and mean immediately.
But didn’t the electronics, appliance, clothing, furniture, steel, toy and machinery industries all try their best?
Build cars people want? People want Camrys, Accords, Tundras and Tightens (loosely speaking).
We all want them to succeed; but overtake the Asians? Maybe, just maybe back in the 90s.
But now? - Import cars from Brazil.
Posted by: ToppaTom | 18 July 2009 at 11:39 AM
One good thing about a restructure of this kind is it cleans house. Old fiefdoms and inside cabals are tossed out and new, less corrupted management takes over. This is what happened in Vegas when Howard Hughes rode into town and started buying hotels. The previous owners were shown the door. And low an behold, Las Vegas became the fastest growing city in North America. A place for the whole family. Ain't life great?
Posted by: Reel$$ | 19 July 2009 at 09:59 AM
When the Big-3 had to pay up to $76/hr for plant workers producing 30% to 50% less than workers being paid $47/hr by Toyota's US plants, everybody should have seen the end coming.
Over greedy Unions and low productivity workers can bankrupt the largest and the most successful manufacturers. That's what happened.
The Big-3 will not produce vehicles in USA for very long unless UAW members produce 30% to 40% more and accept about 40% cut in pay. Otherwise, be prepared for more huge deficits, reduced sales, and many more plant closings. Public $$B cannot keep coming for much longer. Tax payers will wake up and put an end to it.
Posted by: HarveyD | 21 July 2009 at 10:06 AM
"Over greedy Unions and low productivity workers can bankrupt the largest and the most successful manufacturers. That's what happened."
You have NO evidence to support that lie, but you want to believe it and you want others to also. You have a built in pre bias and the sooner you realize that and get the facts, the better off you will be. It is not healthy to go through life lying to yourself.
Posted by: SJC | 01 August 2009 at 10:26 AM