Word: mexico
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...That's more than a little surprising when you consider that Mexico has overtaken Canada in production of GM vehicles, making such popular name plates as the Chevy Silverado and Suburban. Last year GM made a total of 504,858 vehicles at four assembly plants in Mexico; that's 9% higher than the 463,869 cars and light trucks produced by GM Canada...
...Canada contributed $9.5 billion to the rescue of GM's operations north of the 49th parallel - a figure that works out to an unprecedented $2.1 million for each of 4,400 assembly jobs it hopes to save - while Mexico has sailed free? The short answer is that GM Mexico doesn't need a bailout because it's comfortably in the black. "If you have a profitable division at a time when the rest of your business is having a hard time, do you talk about it?" says analyst Pascual Francisco at IHS Global Insight in Lexington, Mass., referring...
...reason GM Mexico has remained profitable while mounting losses have pushed the parent company's U.S., Canadian and European operations to the brink of disaster boils down to the lower cost of doing business in Mexico. GM and other automakers, including Ford and Chrysler, have managed to keep the cost of production south of the California and Texas borders at Third World levels, owing largely to Mexico's weak unions...
...Silao earns $2.80 per hour, a mere 10% of the $28 per hour (not including benefits) earned by his counterpart in Grand Rapids, Mich., or Oshawa, Ont. Add in GM's crushing legacy costs - pension and health-care obligations to retirees - which are only a minor consideration in Mexico, and it explains why the country is a cash...
...Mexico's profit on some vehicles is as high as $16,000 per unit," says Francisco. By contrast, it's not clear whether GM is presently making money at any of its U.S. or Canadian assembly plants...