SALTILLO, MEXICO -- As he sped through this city in northern Mexico this past week, peering through the darkly shaded windows of a minivan surrounded by bodyguards, the incoming head of Chrysler may have been thinking about the advantages of doing business in low-cost labour markets.
Entry-level workers at the high-tech assembly plant operated here by the Chrysler arm of DaimlerChrysler AG make the equivalent of about $120 (U.S.) a week, a fraction of what its hourly workers in the United States or Canada are paid.
That gives Chrysler, the biggest vehicle exporter in Mexico, a definite advantage over some of its competitors. It also goes a long way toward explaining why it builds its popular V8 Hemi engines in Saltillo, and not just multiple versions of the big Dodge Ram pickup truck.
In remarks to reporters as he flew to Saltillo from Detroit for a visit to the assembly plant last Thursday, Tom LaSorda, the 51-year-old Windsor, Ont. native, due to take over as Chrysler's chief executive officer in January, spoke far more about Asia and China than he did about Mexico, however.
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Auto makers have been pouring billions of dollars into the communist-ruled country to ramp up production there. The lure is the world's fastest growing vehicle market and cut-rate wages that make even Mexico look expensive.
Mr. LaSorda, referring to the day when low-cost cars from China make their debut in North America, said he sees the country as one of the biggest near-term concerns for the hypercompetitive U.S. auto industry.
"I still believe the biggest threats are from Asia, no question, and China being right up there," Mr. LaSorda said
"I saw what Japan did. We've seen what Korea did," he added, referring to the growing U.S. market share of auto makers such as Toyota Motor Corp., Nissan Motor Co. Ltd. and Hyundai Motor Co. Ltd.
China could be next, he said.
"My biggest concern would be what's going to happen in five or 10 years coming out of the Asian market," Mr. LaSorda said.
He did not elaborate, but his boss, current Chrysler chief Dieter Zetsche, whom he will replace, has also talked about the damage that soon could be done to Detroit's auto makers -- and their already low profit margins -- by cheap cars flooding into the United States from upstart companies in China.
Mr. Zetsche, who has led a successful turnaround at Chrysler since he came to Detroit late in 2000, is going back to Germany to fill the top job at DaimlerChrysler.
Mr. LaSorda, whose family has long-standing ties with Chrysler and with the auto workers' union in Windsor, sees opportunity in China, and not just more competition, either.
He denied recent reports that Chrysler was looking at building at least one of its own vehicles in China for export to North America. But he said the company was looking at ways of profiting from the export of low-cost China-built auto parts, for use in assembly operations elsewhere around the globe.
"We're not big yet in exporting, but we're putting a big team in China. We're staffing it to look at some sort of sourcing model there," he said.
He also said DaimlerChrysler, the world's fifth-largest auto maker, would decide within about two months whether to start building a Chrysler minivan in China for the Chinese market.
"There will be more Chrysler products in China," he said.
Chrysler and its cross-town rivals General Motors Corp. and Ford Motor Co. are all putting pressure on unions in the United States and Canada to cut labour costs. But increasing the flow of auto parts from China is something the unions scoff at, arguing that poor labour conditions in the country protect corporate profits while betraying workers everywhere.
But Mr. LaSorda, whose father and grandfather were both staunch labour unionists, says his main goal is to keep Chrysler running. "Let's stay competitive and then there's jobs for the next generation," he said.
Asked if he considered himself a working-class hero, as the first top Detroit auto executive with blue-collar union roots, Mr. LaSorda said, "Well, provided I keep their jobs."
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