Andersson: China isn't only source of low-cost parts

VIENNA, Austria -- China is not the only answer to reducing purchasing costs, said Bo Andersson, General Motors' vice president in charge of global purchasing.Eastern Europe and countries that were part of the former Soviet Union, such as Ukraine, also are options for low-cost sourcing of parts."We've had a lot of success with sourcing in Europe," Andersson told the Automotive News Europe Congress here last week."We've put $2.5 billion into Poland. Ukraine is very good -- we've moved more business there than we have to China."Andersson said one drawback to sourcing components from China is higher logistics costs. In most cases, it will cost an additional 10 percent, he said.Burma, Pakistan, Vietnam and Cambodia also are promising as countries for low-cost sourcing, Andersson told a panel on cost control.GM spent $86 billion last year on production materials. Andersson said about 75 percent of GM's business stayed with the same sources, while the remaining 25 percent "will always move around."Laurent Burelle, CEO of French plastics supplier Plastic Omnium, said his company's strategy to master costs is to become involved in a customer's product development as early as possible, then ensure maximum capacity use.Burelle said relocation to lower-cost countries is not always an option for a supplier of large components, such as Plastic Omnium."We cannot transport products such as class-A painted exterior body panels, so we have to be close to the automaker," he said.Said Wolfgang Dehen, Siemens VDO Automotive president: "We decide whether to export from China on a case-by-case basis. We would not export an entire dashboard from there."Dehen said production quality in his company's Chinese plants was comparable to that found in Western plants. He also said automakers should work in partnership with their suppliers.If they squeeze costs too much, Dehen said, "automakers will find that the supplier has no funds left for innovation."You may e-mail Tony Lewin at autonews@crain.com

Andersson: China isn't only source of low-cost parts

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