Expensive gas worries GM purchasing chief
It's no secret that the auto industry's most profitable vehicles are also the hardest hit when gasoline prices climb past consumers' comfort levels. Bo Andersson, the man behind GM's purchasing decisions, says that the tipping point currently hovers around $3.30 a gallon. At that price, sales start to slow, causing a world of hurt for GM and the other automakers. But, he pointed out another rising cost which hurts the industry: shipping. As the auto market shifts towards sourcing parts from all over the world, the rising cost of oil is raising the cost of getting parts from their country of origin to the plant making the vehicle. According to Andersson, for every dollar the price of oil increases, GM spends $6 million more for global logistics. That's a very large number, and the price of oil is doing nothing but climbing these days.
[Source: Automotive News]
Reader Comments (Page 1 of 1)
1985 Gripen 2:05PM (3/17/2008)
I'll try not to get political, but thought I'd point-out that one of the proponents and enablers of turning the U.S. economy into a more globalized one was former President George H.W. Bush and his Secretary of State James A. Baker III. The company they've been with after leaving office, The Carlyle Group (http://en.wikipedia.org/wiki/Carlyle_Group), went bankrupt last week.
http://www.reuters.com/article/innovationNews/idUSN1651831320080317
So maybe this whole globalization thing DOESN'T work as planned? I mean, who could've known that outsourcing everything could be BAD for us? ;-)
As was said, "it's the economy, stupid".
I shouldn't gloat, but it sure seems fitting to me that the big money men who saw fit to screw the little guy out of a job in favor of someone in Mexico or China who would do the job cheaper are now seeing some pain themselves. That's karma, baby!
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armmat 2:46PM (3/17/2008)
While I agree with you 200%, trust me when I tell you they feel no pain...they are protected in so many ways that it's ridiculous. This is an experiment for them. It's not their money, it's not their resources, it's not their lives at stake. They have nothing to lose...even from the getgo...it was one big playground for them
Carlyle group going bankrupt is just a way for them to insure they lose nothing and walk away.
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VW JUNKY 3:07PM (3/17/2008)
It might also mean that we will have to outsourse back to our selves.
I remember a Dilbert a few years ago that went some thing like this,
They outsourced to china that outsourced to Vietnam that out sourced to Japan that out sourced back to the USA as the USA was cheaper! Of course I messed things up but to me it is a cycle of where things are made. My parents remember things as made in Occupied Japan, then all things made in Japan, then maybe it was Taiwan, then Korea, China, I think Vietnam is next and looks like after that the USA! LOL!
Yea it hurts but hey you either got to cry or laugh at the mess.
Later
E
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mike 3:36PM (3/17/2008)
Not to say anything of China raising Auto Import Tariff's by 10% recently. The US is the Sucker in the "Free Trade" debate. Apparently, foreign governments can do anything they want to protect home markets, but, the US worker has to suck it up. And this isn't just auto worker jobs, it's H1B visa programs hitting software developers and nursing/doctors as well.
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mike 3:38PM (3/17/2008)
GM's problem continues to be making Small cars Cheap cars. GM sells BULK. Because BULK burns more gas.
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mike 4:01PM (3/17/2008)
Too bad Bo can't enlighten us as to why GM doesn't dust of those CAD/CAM files of the Impact. Then there wouldn't be a sales problem to discuss.
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rgseidl 4:55PM (3/17/2008)
The incremental cost of shipping parts due to dear oil is peanuts compared to the incremental cost of making them, though in the short term this only affects the supply chain. If high oil prices persist, suppliers will either have to raise prices or go into Chapter 11 like Delphi.
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Mike Z 5:47PM (3/17/2008)
mike:
I hate to break the bad news, but the EV-1 would not sell today, it would of suffered the same fate as the Honda Insight. You would likely be able to buy a Prius and a lifetime supply of gasoline for less.
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Peekoyle 9:17PM (3/17/2008)
Cry me a River
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mckinley 2:18AM (5/24/2008)
being a shipping clerk i have watched shipping domestic prices rise heavily over the last 3 months. freightliners need to change over to hydrogen power, electrical power, propane power, or even horse drawn carraige before the prices of EVERYTHING sail well above what can be afforded.
the economy can come to a standstill over night if we are not more proactive. (the price of gas is currently 3.85, one week ago the national average was 3.79. yesterday the price of gas was 3.73)
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