DEARBORN, Mich. -- Excess automotive production capacity in China will soon trigger a surge in vehicle exports, putting an even tighter squeeze on prices in the auto industry worldwide, the International Metalworkers' Federation said on Tuesday.
The warning came at the opening of a two-day meeting in this Detroit suburb, hosted by the United Auto Workers union, of the IMF and its World Auto Council.
IMF President Juergen Peters said global automakers were rushing "like lemmings into the trap of overcapacity" in China by blindly investing in new or expanded assembly plant operations there.
"Everyone wants to be there if and when the Chinese market blasts off because no one wants to miss the allegedly historic opportunity of a huge increase in their market share," Peters said in a speech.
But Peters warned that too much production in the low-cost China market will soon be chasing too few consumers. And automakers will react by exporting the extra cars and trucks to any markets that can absorb them.
"We already know that cheap imports from China of comparable quality have been common features of the range of consumer goods available for a long time," he said. "In the auto industry it is not re-imports of cheap products that are the threat; it is the fact that cars of comparable brand quality are there ready for delivery."
In addition to his role as president of the IMF, which represents 25 million metal workers in 200 affiliated unions around the globe, Peters is head of IG Metall, the powerful German metal workers' union.
Forecasts of the growth rate of China's vehicle sales vary. But one study presented at the meeting here said China's domestic passenger car sales could rise to about 3 million units by 2007, compared to projected auto making capacity of about 6 million units if announced expansion plans are carried out.
Such an imbalance, and the resulting exports from China, will add to price pressures in the global industry and create "knock-on effects on profits and anticipated profits," Peters said.
He did not elaborate but UAW President Ron Gettelfinger said he saw little good coming from multibillion-dollar investments by companies like General Motors in China, a country whose government he often criticizes for trampling on workers' rights.
"We recognize that the denial of workers' rights in China threatens workers in every country," Gettelfinger said.
"All of us must now compete against the painfully low wages and abysmal working conditions endured by so many Chinese workers."