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GM reviewing Janesville plant proposal

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JAMES P. LEUTE
June 16, 2009
— A local task force trying to steer small-car production to Janesville was expected to submit its final proposal to General Motors today.

Proposals also are expected today from factions in Michigan and Tennessee, the two other states that have joined Wisconsin on GM's short list to start building fuel-efficient small cars in 2011.


GM has said it will announce by the end of June whether Janesville; Orion, Mich.; or Spring Hill, Tenn., will build the small cars that are not now being made in the United States.


The two plants that don't win the small-car job are expected to become overflow plants in case GM ever needs more truck and car production capacity.


Details are sketchy on each of the three proposals, which were to be e-mailed to Detroit.


Sources close to the situation said the proposals would be comprehensive plans that likely would go beyond the 12 main criteria GM established privately to help choose the winning plant.


Tennessee Gov. Phil Bredesen said last week that it's become his impression that up-front cash incentives will trump individual plant merits in determining whether Spring Hill, Orion or Janesville builds the new small car.


Bredesen said GM was asking for cash incentives that would top the $200 million mark.


He also said Tennessee doesn't have that kind of money to spend and doesn't want any part of a bidding war with the other states.


But Bredesen's also a governor who recently presided over a $557 million incentive package to convince Volkswagen to build a new plant in Chattanooga and staff it with 2,000 new workers.


Representatives of Orion Township in Michigan said last week that they will offer GM $44 million in future tax revenue if it puts the 1,200 small car jobs in Orion.


While all three states are facing severe budget shortfalls, Wisconsin typically has been considered the laggard in the incentive package game. Two years ago, the state came up with a $6 million package to help a company build a distribution center and fill 1,000 jobs in southeastern Wisconsin.


A year earlier, the state made a $12.5 million investment for a project in the Kenosha area that was tied to 2,400 jobs.


Wisconsin also has invested in projects to retain auto industry jobs in both Janesville and Kenosha, including a $10 million package to help retool the Janesville plant in 2005.


Sources close to the Janesville task force said the local proposal has been tweaked since the local plant was put in the running for small car production. The local group made its first presentation to GM executives last fall, long before the automaker tumbled into bankruptcy and closed 16 other plants.


The closely guarded proposal will include financial incentives that include state and local support.


Janesville officials would neither confirm nor deny whether a special, closed-door city council meeting Monday night focused on the city's contribution to the overall incentive package.


The agenda indicates the council was meeting privately for the "purpose of deliberating or negotiating the investment of public funds, or conducting other specified public business."


Some think Janesville might have an advantage because of a local labor contract that's considered a benchmark for domestic automakers.


Gov. Jim Doyle has said UAW Local 95's contract will save GM a minimum of $100 million in operating costs each year. Some observers, however, have said Local 95's contract will be used to whipsaw similar or better union deals in Orion and Spring Hill, making the savings in operating costs transferable to other plants.


The source said the local proposal would go beyond cash incentives and labor costs and focus on ways GM can build the small car more efficiently in Janesville than it can at any other plant.


"We've got a lot of great ideas on how they can operate this plant much more efficiently than they think they can," the source said.



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