On Saturday, an explosion at a plant in Jiangsu province, China, that sold products to a General Motors Co. supplier killed at least 75 workers and injured another 185. Two days later, Bloomberg News reported on a study estimating that better interactions with suppliers could have increased GM’s operating profits by about $400 million last year. The coincidence of these two stories seems to defy the cost-cutting logic that has driven most auto-supply work to the “China Cost.” Is it possible that an automaker could have made more money and avoided an appalling tragedy simply by not focusing so much on lowering costs?
The explosion, China’s most deadly industrial accident this year, occurred at a wheel-polishing workshop. An initial government investigation suggested that the plant didn’t have appropriate ventilation, fire-safety equipment or safety training. The factory apparently also had been previously warned about the potential for a dust explosion at the site. A senior Chinese official excoriated its management for a “dereliction of duty.”