GM employees work in coordination with DHL workers managing the flow of parts within the proximity of Liuzhou, China plant. Inside the southern Chinese city plant, many workers could be seen wearing the standard red-and-yellow DHL uniform.
The plant, jointly owned by Guangxi Automobile Group, Chinese partner SAIC Motor Corp (600104.SS) and GM (GM.N), manufactures over 400,000 Baojun brand vehicles a year. In a ploy to minimise costs and prevent assembly errors, DHL resorts to assemble hundreds of kits of parts daily. At some plants run by GM in China, seats are offloaded from trucks, placed on a conveyer belt, and delivered to the operator without having any sort of human touch.
According to a senior GM executive, in order to transport materials and handle parts warehousing away from the plant and delivery to it, GM is outsourcing external logistics contractors in 17 of its Chinese general assembly plants. According to Paul Buetow, the Manufacturing Chief of GM China, deploying material managing jobs to a third party enables the Company to concentrate more on bettering the efficiency and quality of work. Earlier, GM used to depend more on cheap labour and not advanced technology; it also incorporated simplistic manufacturing systems. But now, the Company’s Chinese units have started to depend on advanced manufacturing systems.
GM’s growing utilisation of contractors in China signals a time where most of the work involved in manufacturing vehicles could be outsourced to third parties. However, a few agreements on the union level have restricted the use of third-party contractors inside various plants run by automobile manufacturers in the US and Europe.
NIO, an electric-car startup, has been trying to sway industrial policymakers of China to allow automakers to contract and outsource work to other third parties, so that they can effectively channelize resources into product development and technology innovation.
According to Buetow, GM will never contract out important tasks such as building and assembling of vehicles. He added that such “technical control” would ensure crashworthiness.
SAIC, Guangxi Automobile and GM have approximately 6,000 workers at the Liuzhou manufacturing complex. DHL has placed over 1,500 workers to support these automakers. Assembly line workers usually don’t take up the decisive role; the people who assemble the parts kit choose the vehicular specifications. Parts kits are delivered by DHL in time for a particular vehicle streaming down the assembly line. According to the company, DHL workers who engage in parts kitting are less in number than those who work outside the plant.
Although, similar contracting and outsourcing arrangements are being made on a much smaller scale in North American GM manufacturing plants. However, what has been done in China is much more advanced.
GM’s Chinese manufacturing facilities have experienced a huge leap in efficiency owing to the adoption of technologies such as “zero-downtime” welding and other robots. Also, there are a few collaborative robots that are programmed to work in coordination with humans.