- The Washington Times - Tuesday, June 28, 2005

SAO CAETANO do SUL, Brazil — General Motors in Brazil is hiring, as the U.S. and Europe lay off autoworkers.

Some of GM’s engineering work in the U.S. will be transferred to its plants in Brazil and South Korea as part of a massive cost-cutting measure that will eliminate an estimated 6,250 jobs a year between now and 2008.

“We’re not part of the problem. We’re part of the solution,” said Pedro Manuchakian, vice president of General Motors’ Latin America, Africa and Middle East division, known by the acronym LAAM. Mr. Manuchakian is also engineering director of General Motors do Brasil Ltda.

GM expects to save from $1 billion to $2 billion a project by relying on lower-cost production facilities. Roughly 65 percent of a new car’s cost comes from building and designing the frame.

“The global strategy of General Motors Corp. is to move some of the engineering work away from high-cost centers to low-cost centers. Their loss is our gain in the region. But we benefit the corporation by reducing costs. It’s a two-way street.”

GM Brazil expects to add more than 200 engineers to its current ranks of 660 between now and 2010. It hired 150 last year. The average engineer earns 5,000 Brazilian reals per month, or roughly $2,080. That’s five times more than the average monthly income in Sao Paulo.

In the U.S., GM’s senior project managers, who are engineers, make $92,000 a year, while manufacturing and industrial engineers make $59,000 to $62,000, according to the Vault, a service that surveys company salaries.

GM in Brazil has 19,000 employees, up from 17,000 two years ago.

“When it comes to engineering, General Motors is becoming Global Motors,” Mr. Manuchakian said.

With GM planning to reduce its car platforms from 27 to 15, Mr. Manuchakian, a 33-year veteran, said he expects American engineers to be relocated to engineering hubs like Brazil or lose their jobs.

The automobile industry in Brazil has performed well, despite frequent union disputes, high interest rates and stagnant income.

Two years ago, the sector employed 92,000 workers. Today, carmakers employ more than 104,000 people. South of Sao Paulo, in Parana state, 10,000 auto-sector jobs have been created since 2000.

Brazil produces about 2.2 million cars per year, compared with a fairly stagnant 12 million in the U.S. From January to May, Brazil produced 984,800 cars compared with 851,600 a year earlier.

Under GM’s new system, five countries, including Brazil, will be in charge of creating the company’s automobiles. When Brazil is chosen as lead designer, engineers from the U.S., Europe, Australia and South Korea would participate only to add their opinions about regional tastes.

The U.S. also could be chosen as lead designer on a project, collaborating with engineers from low-income nations.

“So Brazil might have one or two vehicles to develop for the corporation, South Korea might have two, Europe and the U.S. will have some. In some cases, we’ll be making a car that the U.S. used to make from start to finish. This is all new,” Mr. Manuchakian said.

Brazilian engineers will design the new, smaller Hummer 3 this year. Then, the Hummer 3 will leave Brazil for South Africa, where assemblers will prepare it for the European export markets in 2006.

Although the U.S. still will manufacture its own version of the Hummer, new and better-selling GM vehicles will be made by engineers from other countries under a global engineering project led by GM Vice President James Queen.

That means American-made trucks like the Chevrolet S-10 pickup could be entirely drawn up and designed in Brazil and exported to the U.S., Mr. Manuchakian said.

The LAAM market expects to grow about 5 percent annually. Asia Pacific, thanks to China, is expecting double-digit growth.

“If you look at population studies, the growth is coming from the LAAM region,” said Fariborz Ghadar of the Center for Global Business Studies at Pennsylvania State University. “The U.S. is stagnant, the EU isn’t growing, and Brazil is growing like crazy and costs are lower. GM and Ford are going to have to use their engineering talents overseas to help reduce overhead.”

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