Gm Plant
GENERAL MOTORS BLUE MACAW BRAZIL
Plant X-Brazil Analysis
Finance 570: Group Project
Presented By: Abhijit Joshi, Kate Urpsirisuk, and Matthew Smith.
Company Background
Headquartered in Detroit, MI (NYSC: GM) CEOs – John F. Smith: Nov 1992 – May 2000 – Richard Wagoner: Jun 2000 – Present Founded in 1908 Annual global industry sales leader for 76 years Manufacturing facilities in 33 Countries
Brazil’s Improving Economy
Plano Real (1994) intended to stabilize Brazilian economy Prior to 1994, Brazilian inflation reached 2,490%, but leveled off and stood at only 4.3% in 1997 From 1994 through 1997, Brazils GDP grew by 88% 1997 Per Capita GDP was at R$10,080
Plant X – Brazil Venture
“Blue macaw” : GM’s Brazilian experiment to build low cost car. Plant – X : $310 Million manufacturing plant in southern Brazil. Innovative Manufacturing :
• Costs expected to be reduced by 30% - 35% of traditional manufacturing • Produce cars with fraction of the normal capital required • Suppliers manufacture parts and assemble the car onsite
Reasons For “PLANT - X”
Brazil’s Economic Growth Brazil’s Auto Market has exploded in recent years – Demand expected to hit 3 Million in 2000 from existing level of 1.7 Million in 1997. “Popular Car” : Small low cost cars with 1Lt engine dominate Brazil’s auto market
Predicted Demand for Macaw
800
700 600 500 400 300 200 100 1999 2000 2001 2002 2003
Units ( thousands)
Brazil Demand Argentina Demand Chile Demand
SWOT Analysis
Strengths
Brand Image Strong Industry knowledge Financially Robust
Weaknesses
Large Investment Required US Imported Engines (higher cost, Brazil tariff)
Low Manufacturing Cost
Risk Sharing Favorable financing terms
VW’s dominance in auto market
“Blue Macaw” (NOT a proven manufacturing method)
SWOT Analysis
Opportunities
Access to Emerging Markets
(Brazil, Argentina, and Chile) New Manufacturing technique Strong Sales
Plant X-Brazil Analysis
Finance 570: Group Project
Presented By: Abhijit Joshi, Kate Urpsirisuk, and Matthew Smith.
Company Background
Headquartered in Detroit, MI (NYSC: GM) CEOs – John F. Smith: Nov 1992 – May 2000 – Richard Wagoner: Jun 2000 – Present Founded in 1908 Annual global industry sales leader for 76 years Manufacturing facilities in 33 Countries
Brazil’s Improving Economy
Plano Real (1994) intended to stabilize Brazilian economy Prior to 1994, Brazilian inflation reached 2,490%, but leveled off and stood at only 4.3% in 1997 From 1994 through 1997, Brazils GDP grew by 88% 1997 Per Capita GDP was at R$10,080
Plant X – Brazil Venture
“Blue macaw” : GM’s Brazilian experiment to build low cost car. Plant – X : $310 Million manufacturing plant in southern Brazil. Innovative Manufacturing :
• Costs expected to be reduced by 30% - 35% of traditional manufacturing • Produce cars with fraction of the normal capital required • Suppliers manufacture parts and assemble the car onsite
Reasons For “PLANT - X”
Brazil’s Economic Growth Brazil’s Auto Market has exploded in recent years – Demand expected to hit 3 Million in 2000 from existing level of 1.7 Million in 1997. “Popular Car” : Small low cost cars with 1Lt engine dominate Brazil’s auto market
Predicted Demand for Macaw
800
700 600 500 400 300 200 100 1999 2000 2001 2002 2003
Units ( thousands)
Brazil Demand Argentina Demand Chile Demand
SWOT Analysis
Strengths
Brand Image Strong Industry knowledge Financially Robust
Weaknesses
Large Investment Required US Imported Engines (higher cost, Brazil tariff)
Low Manufacturing Cost
Risk Sharing Favorable financing terms
VW’s dominance in auto market
“Blue Macaw” (NOT a proven manufacturing method)
SWOT Analysis
Opportunities
Access to Emerging Markets
(Brazil, Argentina, and Chile) New Manufacturing technique Strong Sales