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Three plants in running for small car production

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FRANK J. SCHULTZ
June 2, 2009
— The chances of Janesville’s General Motors plant producing cars again just went up.

GM announced Monday it was filing for bankruptcy, and part of the company’s reorganization includes building a new, small car at one of three plants that are closed or are scheduled to close:


-- Spring Hill, Tenn.


-- Orion, Mich.


-- Janesville, Wis.


But that’s not all.


The two plants that aren’t chosen to make the new car will continue to be on what GM calls “standby capacity status.” That means they are first in line to reopen in case GM needs more production capacity than it now predicts, GM spokesman Chris Lee said.


That means Janesville stands a good chance if the economy roars back and demand for vehicles rises, said Assembly Speaker Mike Sheridan, D-Janesville, a former president of United Auto Workers Local 95.


“There’s some hot (GM) products out there. They’ve just got to turn the corner,” Sheridan said.


“This is a big deal. We’re on the right side of this bankruptcy,” Sheridan added.


“We’re still in the game,” was the assessment from Janesville’s Tim Cullen, co-leader of the task force that has been working since last summer to bring another product to Janesville’s plant.


Task force members plan to meet Thursday to discuss what more, if anything, they can do to be awarded the small car.


“Our whole process has been about showing General Motors why they should be in Janesville,” Cullen said.


Sheridan said the governor’s office also is following up on the announcement, checking to see if the state can do more to enhance its offer to GM.


Sheridan said the task force’s offer already includes incentives from the state, Rock County and the cities of Janesville and Beloit.


Sheridan noted that a provision in the not-yet-approved state budget includes a Development Opportunity Zone for Janesville. The DOZ would offer up to $8,000 in tax incentives for each job retained or created, Sheridan said.


“None of this is a sure thing,” Cullen said. “The balance is to keep fighting to get the jobs here without over-inflating the likelihood of success. It’s kind of a balance we’re trying to strike. We’re not giving up, but we haven’t won.”


GM will make a decision in the next 30 to 60 days, Cullen said.


“This new small car will play a vital role in GM’s plans to improve the fuel efficiency of its vehicle fleet,” according to a GM news release. “Small cars represent one of the fastest-growing segments in both the U.S. and around the world. The re-tooled assembly plant will be capable of building 160,000 cars annually.”


Crain’s Detroit Business cited sources who said the small car would be the Chevrolet Spark mini-car, which is modeled after the Chevrolet Beat.


The Janesville plant’s shutdown was announced months ago. GM on Monday announced a fresh round of closures affecting nine plants that will close permanently. It also named three that are to be closed but—along with Janesville—kept on standby status: Spring Hill and Orion assembly plants and the stamping facility at Pontiac, Mich.


The closures will displace 18,000 to 20,000 GM employees, the company said.


“My heart goes out to each and every one of those workers at those other factories,” Sheridan said. “We know what they’re going through. These are tough times.”


Others’ misfortune could be Janesville’s gain. Because of all the plants GM will have closed, Cullen predicted the automaker will be undercapacity when the American economy rebounds and people return to buying GM vehicles. Even if Janesville isn’t chosen to make the small car, it has hope.


“We’ll be in a great position then as one of only two plants that can take on additional capacity,” he said. “We’re not by any (means) home free, but we’re in better shape today than 14 other plants.”


Why Janesville

Lee said Spring Hill was on the list because GM recently made a “significant investment” to bring production of the Chevrolet Traverse crossover vehicle there, and GM would want to maximize that investment.


The Associated Press quoted a UAW leader in Spring Hill who said the Traverse will be made in Lansing, Mich., instead.


Orion is right in the middle of GM’s supply base and in an area where many workers have been laid off, Lee said.


Janesville’s advantages include the ongoing discussions with the state of Wisconsin about the plant, Lee said.


“Wisconsin has been working very diligently with General Motors,” Lee said, referring to the local/state task force that has laid a menu of arguments and incentives on the table, hoping to lure GM back.


Janesville also presents an opportunity for a “transformational workforce,” Lee said. That means Janesville might have to hire new people to replace recent retirees, and those workers would be hired at lower compensation rates, which would save GM money, Lee said.


Sheridan said Janesville’s UAW Local 95 also has the most competitive labor agreement in the company, something Local 95 officials also said last week. Lee could not immediately confirm that.


On the down side, one of the unknowns is the politics that might play into GM’s decision, Sheridan said.


Sheridan didn’t elaborate, but Michigan has the most electoral votes of the three states affected, and it has seen the most layoffs, which could boost the Orion plant’s chances.


Cullen pointed out GM is trying to sell its Saturn brand, and Saturns are built in Spring Hill. If GM sells Saturn, “whoever buys that is going to want that plant. That could conceivably happen,” Cullen said.


Then it would be down to just Janesville and Orion.


GM also is putting its Pontiac, Mich., stamping plant on standby status. That means Pontiac could be the stamping plant for the new small car assembly plant, but it doesn’t have to be, Lee said. Another scenario would be for the Pontiac plant to help if GM needs more stamping production for its other plants, Lee said.


Don’t read too much into the fact that Pontiac is 5 or 6 miles from the Orion plant, or that the Spring Hill plant has its own stamping facility, Lee said.


Local workers

If the plant reopens, Sheridan said, local workers would be first in line to get those jobs.


Sheridan was not sure, however, whether those who have left Janesville for jobs at other GM plants would be able to return to work in Janesville.


While hopes have risen, Sheridan said he doesn’t want to set people up for a big disappointment.


“I think people need to be realistic. I think people have been realistic,” Sheridan said. “People are moving on. They’re going back to school, getting their education, starting to look for jobs, but in the meantime, let’s do what we can to secure that product, and if not that product, another for Janesville.”


Sheridan noted the Janesville plant has built every kind of car over the years, from Cavaliers to Suburbans and every size in between.


“So just send it here; we’ll get ’er done,” Sheridan said. “Not only that, we’ll get it up and running the quickest and with the best quality.”


Politicians involved

Gov. Jim Doyle, Sheridan, UAW Local 95 officials and others held a news conference at a GM dealership in Middleton on Monday to give their take.


Doyle said the state already has offered GM a package of incentives if it reopens the Janesville plant, and that deal remains on the table. He declined to describe the package but said it would be a significant investment by state and local taxpayers.


“I spoke with GM executives over the weekend and have learned the plant at Janesville will not be sold as a part of the bankruptcy, meaning that we do have hope and can compete for jobs manufacturing cars,” Doyle said in a news release.


Doyle noted he appointed a task force last year to make an offer to GM to keep the Janesville plant open, and that effort seems to have had an impact.


“Everything we have been fighting for over the past year is to get us to this point,” Doyle said. “We are in a positive position, and we are going to compete very aggressively for everything moving forward.”


Hope for Kenosha, too

Doyle also said Monday a bankruptcy plan for Chrysler does not require the company to sell its engine plant in Kenosha, which is expected to be closed at the end of next year.


Doyle said that means Chrysler’s new ownership will be allowed to decide whether to buy the plant, which has 800 jobs, and keep it open.


“The door has not been closed on either Janesville or Kenosha,” Doyle said at the Middleton news conference. “In fact, in both of those cases, the door has been opened at least a crack, and we’re going to work very, very hard to make the case about why these would be great facilities for the new, emerging GM and Chrysler companies.”


Gazette reporter Gina Duwe and The Associated Press contributed to this report.

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