Business/Financial Desk; SECTC Under a Chevy's Hood, Some Innards From China and Japan 26 March 2008The New York Times OSHAWA, Ontario -- General Motors <javscript:void(0)> car engines were once the stuff of American legend. The Beach Boys sang, ''nothing can touch my 409,'' about a powerful Chevy V-8. Oldsmobile owners in 1981 were so angered that their cars had been fitted with Chevrolet engines instead of Oldsmobile ''Rockets,'' the subject of another hit song, that they successfully sued G.M. over the swap. The company has since eliminated brand distinctions between engines, saddling them with names unlikely to inspire songwriters, like Ecotec, Vortec and Northstar. But some owners of the Chevrolet Equinox, a ''compact'' sport utility vehicle built in North America, might be surprised to learn the origin of the engine under their hoods -- it's made in China. Last year, China exported more than $12 billion in auto parts, up from less than $2 billion in 2002 -- the majority to North America. The increase in exports has added to the problems plaguing North American suppliers. Most famously, Delphi, which is seeking to emerge from bankruptcy, has closed dozens of plants and moved some production overseas to become more competitive, including to China. Soon China will be exporting whole vehicles to North America. Last year, Chrysler signed a deal with China's largest car company, Chery Automobile, to supply a Dodge subcompact. One of the most important steps on China's long march to becoming an auto exporter was the little-noticed arrival of the humble engine inside the 2005 Chevy Equinox. ''This is the first Chinese-made engine going into this market,'' said Eric A. Fedewa, vice president for powertrain forecasts at CSM Worldwide, an automotive analysis firm. ''It was an experiment to see if G.M. could use its facility in China to take costs out of a vehicle.'' G.M. neither promoted nor hid the fact that the Equinox engine (and that of its twin, the Pontiac Torrent) is made in China. The car's sticker notes 55 percent of its content is make in the United States and Canada, 20 percent in Japan, 15 percent in China and the rest from elsewhere. But no sticker tells consumers the engine is built at Shanghai General Motors <javscript:void(0)> , a joint venture of G.M. and the Shanghai Automotive Industry Corporation <javscript:void(0)> , a Chinese company.
Originally intended to power Buick sedans built for the Chinese market, the engine is the only one available in the Equinox base model. Starting with the 2008 model, a larger American-made motor became an option in a higher-end version of the S.U.V. The same model of engine as the one made in China is produced at a G.M. engine plant in Tonawanda, N.Y., about a two-hour drive from the Canadian factory that builds the Equinox. G.M. does not break out internal costs, so it is not known how the Chinese engines compare in price with those from Tonawanda. Mr. Fedewa said an engine of this sort typically costs $800 to $900 to make. Even in an era of global manufacturing, the Equinox is exceptionally international. Its engineering was largely done here in Oshawa, headquarters of General Motors of Canada. <javscript:void(0)> It uses a five-speed automatic transmission made in Japan by Aisin Seiki <javscript:void(0)> , though G.M. is a leading manufacturer of automatic transmissions. And the parts are assembled at a factory in Ingersoll, Ontario, a joint venture between G.M. and Suzuki, another Japanese firm. Suzuki was a major driver in the decision to use the Chinese-made engine. Dick Kauling, a senior engineering manager at G.M. Canada who helped develop the Equinox, said his group had worked closely with engineers at Suzuki, as well as G.M. engineers in Germany, China and Warren, Mich. ''The Suzuki guys said, 'We have the global logistics that can make this happen,' '' Mr. Fedewa said. Suzuki proposed loading a container ship in Shanghai with engines, then having it stop in Japan to pick up transmissions on its way to Canada. A 25-year G.M. veteran, Mr. Kauling, remembers when car buyers hotly debated the differences between the engines in G.M. brands, not to mention those from other automakers. But he said the old way of organizing production was less than efficient. Early in his career, the company was running short of engines for Chevrolets but had a surplus of Oldsmobile motors. He was assigned to find a way to modify the incompatible Oldsmobile engine -- the two brands had not even been able to agree on common bolt sizes -- to fit into a Chevy body. Now, Mr. Kauling said, ''I don't think we're concerned where the parts come from,'' adding, the Chinese-made engine ''has got General Motors <javscript:void(0)> all over it.'' The idea of using the Chinese engine did not sit well with the Canadian Auto Workers, the union that represents workers at the Equinox factory. Because of its complexity, engine assembly uses a higher proportion of skilled, well-paid workers. And Basil E. Hargrove, the union's president, blames what he calls unfair trading practices by Asian manufacturers for much of the North American industry's problems. ''Today it's South Korea and Japan, and tomorrow it's going to be China,'' he said. ''It's only a matter of time before G.M., Ford and Chrysler are going to deal with the crisis they face by going into these countries and shipping into here. Very few consumers ask: where is the engine built or where is the transmission made?'' Assessing the quality of Chinese manufacturing is difficult, partly because of the design of this particular engine. Gabriel Shenhar, the senior engineer of Consumer Reports auto test division, said that in the Equinox the engine is coarse, noisy, uses more fuel than similar vehicles and produces relatively little horsepower for its size. He did not blame the Chinese for those shortcomings. ''This engine's blueprint did not originate in China,'' Mr. Shenhar said. ''The 3.4 liter, 185 horsepower has always been a lackluster engine.'' He called flaws in the design ''a reflection of G.M.'s lack of attention to detail and half-hearted effort on this car.'' A spokeswoman for Chevrolet, Carolyn Normandin, said, ''Our vehicle comes with a standard six-cylinder engine, while most of our competitors only offer standard four-cylinder engines.'' She added that the company will offer improved fuel economy in the next-generation Equinox. She declined to say when that will be introduced. Some observers expect the new model will be out in about two years. Mr. Fedewa, the analyst from CSM, expects they will not be fitted with Chinese engines. ''Sourcing from halfway around the world is very challenging,'' he said, referring to the difficulties of fitting huge transmissions into shipping containers and the possibility of supply-chain disruption. ==============================
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