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GM plant prospects are possible, but uncertain

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JAMES P. LEUTE
October 14, 2008
— How about production of the eagerly anticipated Chevy Volt in Janesville?

Or overflow assembly for the hot selling Chevy Cobalt, a fuel-efficient compact that General Motors can't seem to keep on dealers' lots?


Or possibly large vans, which are now built at a GM plant that's even farther outside the automaker's parts network than the Janesville plant.


All have come up in various conversations about possible new products for the Janesville plant, where workers learned Monday that production of full-size sport utility vehicles would end Dec. 23.


Since early summer, a local task force has been working on a plan to bring a replacement product to Janesville. In September, the group made a proposal to GM officials and is awaiting a second meeting.


The group isn't just sitting around. Its leaders say the task force meets weekly to flesh out new ideas, compare intelligence and solve any challenge that Detroit might throw its way.


At the heart of the group's proposal is a new fuel-efficient vehicle that can be built in Janesville.


Armed with a recently ratified local union contract that's considered the most competitive in the industry, the group hopes that a $25 billion federal auto package will allow GM access to cash to retool old plants such as Janesville's for production of fuel-efficient vehicles.


Much beyond that, the local task force has been mum on the details of its proposal to GM officials.


What's left is speculation—some educated, some not—on prospects for the Janesville plant.


Chevy Volt

If GM can work out battery issues, it hopes to build the Volt by late 2010. Whether the Janesville plant could land the contract is uncertain, as other communities are seemingly well ahead in their bids to attract the work.


The highly anticipated but often delayed Volt will be capable of driving 40 miles on a fully charged battery before it switches to a gas generator.


GM has not said where it will build the extended-range electric car, but industry speculation has centered on the automaker's Detroit/Hamtramck plant, which now employs nearly 2,000 people and builds the Cadillac DTS and Buick Lucerne.


To produce the Volt, the Detroit plant would need a $336-million retooling.


Two weeks ago, the Detroit City Council approved a $136-million tax abatement for GM's proposed investment in the plant, according to the Detroit Free Press.


In addition, the automaker plans to build a $349 million plant in Flint that will make engines for the Volt and the Chevrolet Cruze, another vehicle due in 2010.


The Michigan Economic Growth Authority has approved tax credits, while three Michigan cities have OK'd tax abatements to ensure GM manufactures the Volt and its key components in Michigan.


But just because the major Volt components seem to be spoken for doesn't necessarily leave Janesville out of the picture, one local source said.


"They haven't said anything about where they're going to make the batteries," the source said.


Chevy Cobalt

Don't let a 16 percent drop in September's Cobalt sales fool you. Even with three shifts building the vehicle at GM's plant in Lordstown, Ohio, consumer demand continues to outstrip supply, GM officials said.


For the year, Cobalt sales are up 6 percent, while GM's overall sales are down 18 percent.


GM added a third shift at Lordstown in August, and the plant will work overtime Saturdays through the end of the year.


If three shifts can't meet the demand at Lordstown—GM's sole U.S. compact-car factory—it might need an overflow plant, and there's been some speculation that a retooled Janesville factory could fit the bill.


State Rep. Mike Sheridan, a former GM worker and former president of United Auto Workers Local 95 in Janesville, said the local plant could be an overflow assembly plant for GM's next hot vehicle.


"Remember how it was with the big SUVs?" he said. "GM needed three plants to meet the demand. Now they only need one, but if GM can identify where all those former Suburban and Tahoe buyers have gone, Janesville could build overflow."


The high-mileage Chevy Cruze, which is due out in 2010, also is slated for the Lordstown plant, which could have its hands full at the time with the popular Cobalt and its variations.


Chevrolet Express

The Express and its sibling, the GMC Savana, are full-size vans configured for either commercial or passenger use.


The vehicles are built at GM's plant in Wentzville, Mo., which underwent a $150 million retooling in 2003.


Speculation in Janesville has been that management-union relations in Wentzville have been less than stellar, and the Missouri plant is even more removed from the automaker's supplier networks than the Janesville plant.


But sources in Janesville have said there is little chance the UAW will allow one local union to whipsaw another and steal an existing product.


The Wentzville vans come as commercial cargo vehicles typically used by customers that require heavy-duty hauling or trailering requirements or as eight-, 12- or 15-person passenger vans.


Other possibilities

GM reportedly is thinking about bringing some of its high-mileage European models to the U.S. market, which could offer potential for the Janesville plant.


Sources have told the Gazette that some of GM's European cars could be modified for production and sale in the United States.


"Development costs would be less, and the modifications for the U.S. market would be modest," one source said.


Another said that production of European models in the United States makes sense, given the value of the dollar overseas and shipping costs.


"Anything we can get for Janesville has merit," he said. "What we're really looking at is new product and being an overflow plant."


Federal loans could help plant's prospects

Recent congressional approval of $25 billion in loans to the U.S. auto industry couldn't have come at a better time as a local delegation works to secure a new product for the beleaguered Janesville plant.


Just two weeks ago, Congress OK'd a loan package to help the industry refurbish decades-old plants and develop advanced batteries and gas-electric hybrids. The goal is a broader lineup of gas-electric hybrid vehicles, new plug-in electric cars and an expansion of fuel-efficient engines.


General Motors, Ford and Chrysler lobbied hard for the funding.


Industry observers said the package could help GM retool the Janesville plant, which GM said Monday would end production of full-size sport utility vehicles Dec. 23.


In September, a local delegation made a pitch to GM officials to bring a fuel-efficient vehicle to the local plant's production lines.


"It is our hope that the federal package offered by the government and the package that was presented by the GM task force will somehow benefit Janesville and the members of Local 95," said UAW Local 95 President Andy Richardson.


"We have a strong history of building world class vehicles, and we still hold hope for the future."


Sen. Herb Kohl, D-Wis., said the federal package supports that hope.


"We have worked to provide GM with significant federal resources to encourage re-tooling and reopening the Janesville plant so workers' jobs remain safe," he said Monday.



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