GM plant stuck in neutral
Those are the three strategies General Motors typically uses to dispose of an assembly plant it no longer needs.
But this is not a typical time for the automaker, and the short-term option of any of the three for the soon-to-be shuttered GM plant in Janesville is uncertain.
GM received $13.4 billion in federal loans earlier this year and must present President Barack Obama a viable restructuring plan by June 1 to get any more. Without more federal aid, GM's future is in serious doubt and some form of bankruptcy is possible.
The massive GM plant in Janesville is one of many pledged as collateral for GM's $13.4 billion loan.
As such, GM cannot sell, lease, donate or otherwise dispose of the 4.8 million-square-foot plant that sits on 250 acres of land.
In addition, GM must maintain the land, buildings and fixtures. Buildings can't be demolished and fixtures and other personal property must not be removed, according to the mortgage document recorded at the Rock County Register of Deeds office.
When it comes to disposing of its Janesville property, GM's hands are tied.
GM ended local production of full-size sport utility vehicles in December. Work on the plant's medium-duty Isuzu line is scheduled to end Thursday.
As a closed plant, Janesville is in a precarious position.
If GM is somehow successful in righting its ship, a local coalition has been working to convince the automaker to bring a new product to Janesville. But GM has too much capacity now, and a slimmer manufacturer likely would need even less.
Satisfaction of the government loans presumably would allow GM to do what it wants with the Janesville plant. If it has no product for Janesville, GM could sell, donate or redevelop the property on Janesville's south side.
But if GM founders and defaults on its loans, the U.S. government could become the owner of GM facilities here and elsewhere.
Local leaders have said they'd like to get the GM property under local control and move forward with some sort of reuse or redevelopment.
"I liken it to trying to sell your neighbor's car," said John Beckord, president of Forward Janesville. "You understand you might be able to buy your neighbor's car and then resell it, but you don't know that you can buy it."
That makes it difficult for the community to move forward with the property, he said.
"You've got a company that's on the verge of bankruptcy, you've got a property that's heavily collateralized and you've got a party who, quite frankly, probably isn't putting the disposition of this particular property at the top of its list," Beckord said.
If GM defaults, there's a possibility that local control would have to come from the federal government.
Administration sources in Washington, D.C., however, have told the Gazette that the government would be willing to work with GM on a suitable disposition of the Janesville plant, the saga of which Obama is well aware since a campaign stop here last year.
"Local control has its advantages and disadvantages," said Doug Venable, Janesville's economic development director. "With local control, you can be more aggressive and flexible in marketing the property, and there tend to be more state and federal remediation programs available when there is public ownership."
The downside, Venable said, is that local control would necessitate property management skills that local public officials just don't have.
And what nobody knows for sure about the Janesville site is its environmental condition.
"As a manufacturer for 80 years or so, there's a natural suspicion that there might be some environmental concerns," Venable said. "We haven't been aware of anything that's migrated off-site.
"Most of the property is capped by buildings and parking lots, and the assumption is that environmental problems have been cleaned up as the plant's expanded over the years, but we just don't know."
GM has said it will conduct a complete environmental study and remediation plan for the property prior to its disposition. But that assumes GM is still in a position to do so as the property's owner.
If GM moves into some form of bankruptcy, it's possible a judge could sell the Janesville property to the highest bidder. It's possible the buyer could be absolved of some of the property's environmental cleanup, if necessary.
"Bankruptcy judges are often most concerned with getting the maximum value for an asset," Venable said. "The judge is not necessarily making a decision on what might be best for the community."
Beckord agreed, adding that the environmental uncertainty could make redevelopment or reuse difficult for some time.
Still, local economic development officials said they will continue to work toward either a continued GM presence or an acceptable reuse or redevelopment.
While listening to proposals from the local coalition, GM has not committed future production to Janesville.
It does, however, remain committed to the best possible use of the property, plant and equipment, said Dan Flores, a GM spokesman.
"These are clearly unprecedented times," Flores said. "We take pride in being a responsible corporate citizen, and we've done that over the years in Janesville.
"Whatever the ultimate outcome is for Janesville, we'll continue to work with the community and its leaders."
Last updated: 10:06 am Thursday, December 13, 2012