General Motors Company (GM)’s Huge Investment In a Big U.S. Overhaul

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Has the new post-bailout General Motors Company (NYSE:GM) emphasized China at the expense of the U.S.?

General Motors (GM)Not really, but it’s true that General Motors Company (NYSE:GM) is planning huge new investments in China. Those plans have provided fodder for partisan attacks – including a big one that landed last week.

In a Wall Street Journal op-ed piece last Tuesday, former auto-industry pundit Edward Niedermeyer argued that “it is China that is disproportionately benefiting from the bailout of America’s erstwhile automotive icon.” The Journal‘s editorial page has repeatedly criticized the 2009 bailout of General Motors Company (NYSE:GM).

Needless to say, Niedermeyer’s broadside didn’t go over well at GM headquarters. On Monday, GM’s PR chief Selim Bingol fired back with a letter to the Journal defending General Motors Company (NYSE:GM)’s $11 billion in planned investments in China – and disclosing that GM is gearing up to make an even bigger series of investments right here at home.

A huge investment in a big U.S. overhaul
Bingol said in his letter that GM is planning to invest approximately $16 billion in the U.S. between now and the end of 2016. That’s a huge-sounding number, but GM has a huge overhaul in the works: About 20 new or significantly refreshed models will hit GM’s U.S. dealerships between now and the end of next year, with more on the way in the middle of the decade.

All that money will go to engineering, testing, new tooling, expansions to existing GM factories here in the U.S., and – assuming sales continue to rise – additional workers as shifts are added to those factories to increase production.

GM has already invested $9 billion here in the U.S. since emerging from bankruptcy in 2009, and created 23,000 jobs, Bingol said in his letter. At least among serious observers, there’s little question that General Motors Company (NYSE:GM) is determined to grow and expand in its home market, and that it is making serious investments to do so.

At the same time, a big push to take advantage of growth in China
But the controversy arises because GM is also in the midst of a massive expansion push in China, with plans to invest $11 billion by 2016. That push is entirely appropriate for General Motors Company (NYSE:GM): China has become the world’s largest auto market, and it is expected to grow considerably bigger over the next several years.

GM and its Chinese joint-venture partners sold 2.8 million vehicles in China last year, more than any other automaker – including GM’s closest China rival, Volkswagen. GM thinks that it has the opportunity to boost that to 5 million by 2015. Making that happen will require several new factories, and a lot of additional infrastructure.



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