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GM plant's future hinges on next contract

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Jim Leute
December 16, 2013

JANESVILLE--When General Motors announced in June 2009 that it would file for bankruptcy, it also said it would award production of a new small car to one of three plants that were either closed or about to be closed.

That immediately buoyed hopes in Janesville, where six months earlier GM had ended production of sport utility vehicles two days before Christmas.

A GM plant in Orion, Mich., won production of the small car, and the two remaining plants—Janesville and Spring Hill, Tenn.—were placed in “standby status.” The facilities were kept out of the automaker's bankruptcy filing and left as the next in line for production if GM ever needed more capacity.

Spring Hill eventually came back online as a flex plant for production of the Chevrolet Equinox and GMC Terrain.

That left the Janesville plant—GM's oldest—as the only one on standby.

The hulking plant is still standing by, although it's aging by the day.

GM has been tight-lipped about the future of the Janesville plant, other than to say that future market conditions and the contract between the automaker and its union will dictate what happens.

In the four-plus years since the Janesville plant became a standby loner, industry analysts have waffled in their opinions about Janesville's future.

Some said that if annual U.S. auto sales hit 16 million vehicles, GM, given its market share, might need the Janesville plant for some sort of production.

Others, however, countered that the aging Janesville facility was too far off a tightening production and supply loop that was constraining closer to Michigan.

Edmunds.com estimates that sales this year will hit 15.5 million vehicles before increasing to 16.4 million next year. If so, that would be the highest total since 16.5 million were sold in 2006.

CONTRACT NEGOTIATIONS

Analysts opinions aside, the real decisions about the Janesville plant's future will be made in the summer of 2015, when GM and the United Auto Workers negotiate a new national contract.

The last contract, reached in 2011, specifically keeps Janesville in standby status, and it's highly unlikely the two parties would reopen the national contract just to negotiate the status of Janesville.

“No plant, whether it's operating or not, is closed until its closed at the national table,” said Kristen Dziczek, director of the labor and industry group at the Center for Automotive Research.

Some industry insiders suggest that in 2015 GM will either not need additional production capacity or, if it does, it will look to locations other than Janesville. They believe GM will finally be ready to shed Janesville, which the UAW could use as a bargaining chip for production awards or expansions at other plants.

Whether the UAW is willing to give up the fight for Janesville remains to be seen.

STILL ON THE TABLE

Ron McInroy is director of UAW Region 4, which is based in Lincolnshire, Ill., and includes Janesville and its Local 95.

“I have and will continue to lobby the national parties for a replacement product for the idled GM assembly plant in Janesville,” McInroy said in an email.

McInroy said the union's focus on quality and teamwork has paralleled GM's commitment to bring work back into the United States to create new jobs.

“Unfortunately, the demand and sales of new vehicles has not outgrown the existing manufacturing capacity,” he said.

At the national level, Bob King is the current UAW president. He, however, will be replaced next summer by Dennis Williams, the former director of Region 4 with a strong connection to Janesville.

Amy Loasching—a former Janesville GM employee, union representative and Janesville city council member—is an administrative assistant to King.

Regional union officials believe Williams' appointment, coupled with Loasching's position, will keep Janesville in the discussion.

“UAW Vice President Joe Ashton has done a remarkable job in keeping our plant in Janesville on the radar with the top leadership of GM,” McInroy said. “I have had numerous conversations with Joe, and I am confident that he understands how important it is to us to keep Janesville on idled status.”

Dziczek said the union would negotiate for more jobs that carry a better standard of living.

“First and foremost, the UAW is out for as many jobs as it can get, and they will present information on current capacity, sales projections that support that,” she said.

Dziczek wouldn't venture a guess as to how Janesville would come out of the 2015 contract negotiations.

She did say, however, that if GM and the UAW agree to officially close the local plant, the timing could be good for Janesville.

REDEVELOPMENT TIME?

Last month, the first significant economic development proposal was made for GM's former Buick City complex in Flint, Mich., where assembly ceased in 1999 at a set of factories that once employed more than 27,000 autoworkers. A cast iron pipe company is expected to be the first company to break ground at the massive property.

In Georgia, a developer is working to buy a GM plant that closed in 2008. According to the Atlanta Business Chronicle, GM is asking about $60 million for the Doraville plant, but capital partners need confidence they can deal with the environmental challenges the site presents.

In Wyoming, Mich., private redevelopment plans are moving forward at the site of a GM stamping plant that closed in 2009. The city bought the site for $1, and an electrical products wholesaler plans a $4.5 million manufacturing and warehouse complex.

“If the GM plant in Janesville is to be closed, this is probably a better time because of the motivation of GM to move some of these closed properties,” Dziczek said. “There are some of these industrial properties coming out now, and there's some interest in re-use.

“It's not a bad time to be a community with a former GM plant.”



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