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Janesville GM plant will not get new product

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JAMES P. LEUTE
June 25, 2009
— Six months after ending sport-utility vehicle production in Janesville, General Motors is poised to deliver what could be the knockout blow to its Janesville assembly plant when it awards production of a new line of small cars to a Michigan plant.

GM was expected to announce Friday that its Orion, Mich., plant won a high-stakes competition with facilities in Janesville and Spring Hill, Tenn., to build GM’s next-generation subcompact car, a person briefed on the decision said Thursday.


GM wouldn’t comment late Thursday on the report that Orion was selected ahead of plants in Janesville and Spring Hill.


GM’s decision apparently leaves the Janesville and Spring Hill plants in "standby" mode and puts them the top of the list should GM ever need assembly capacity.


What standby means is uncertain to John Dohner Jr., the GM shop committee chairman for United Auto Workers Local 95 in Janesville.


"We just don’t know," Dohner said.


It could mean the Janesville plant and its 1,200 workers sit in limbo indefinitely, he said.


Dohner said it’s possible laid off Janesville workers would run out of unemployment benefits and leave GM before the automaker needs production in Janesville, if it ever does.


Independent auto industry analyst Erich Merkle agreed that the definition of "standby" is murky.


"GM keeps changing the terminology … closed, idled, standby," Merkle said. "I wouldn’t be overly optimistic about being a standby plant."


That’s because so many things have to happen before GM ever gets to the point where under-capacity is a problem, Merkle said.


"The economy has to turn around, sales have to rebound and the even bigger question is where is GM going?" Merkle said.


If more production is ever needed, it’s likely years away, he said.


"I think GM’s market share will go under 15 percent," he said.


Merkle doesn’t believe sales will rebound enough to grab the market share that would require more production capacity.


GM’s apparent decision disappointed those in Janesville who were willing to comment Thursday night.


"I presume the rumors are accurate, but I hope against hope that it’s not," said Tim Cullen, who headed up a local task force that presented a proposal to GM to put the small car work in Janesville.


Cullen sounded like the wind had been sucked from his sails.


"I’m more disappointed than I can even describe," he said.


Winning the work would have been a great psychological and economic boost for Rock County, he said, noting that Janesville’s inclusion on GM’s short list lifted the community’s spirits.


"I just feel bad for 1,500 families that had all this hope these last few weeks, and now, if the news is true, that’s who I feel bad for," Cullen said.


Dohner said he has been telling laid-off workers that Janesville’s bid was a long shot and that they shouldn’t get their hopes too high.


"This doesn’t surprise me," Dohner said. "In my mind, it didn’t matter what we brought to the table.


"Janesville did all it could do, and the people on the task force really busted their butts trying to get something here, but GM is trying to move everything to Michigan."


Gov. Jim Doyle and other officials declined comment, saying Thursday that they had not received a decision directly from GM.


Cullen said he talked to Doyle on Thursday.


"He was very disappointed by the rumor and had heard nothing official," Cullen said, adding that he believed GM had scheduled calls to the three governors for today.


Cullen wasn’t sure if the task force has more work to do.


"I think we need to have this finalized and then do some talking and thinking about that," he said. "I don’t know where we go. Everybody worked to the wall to win this. I think this needs to be finally settled, and then we’ll deal with the future after that.


"…We thought we had a terrific chance to win this," Cullen said. "We always thought it was uphill against Michigan, but we thought our proposal was superior, and it may have been superior."


GM’s pick of Orion will save about 1,200 jobs at the factory that had been slated to shut down later this year. Gary Malkus has managed the Orion plant since transferring there in December when the last SUV rolled off the line in Janesville.


"We had stiff competition from Tennessee and Wisconsin," said Oakland (Mich.) County Executive L. Brooks Patterson. "I think the impact of reopening that plant and making the small car here will have a huge long-term effect not just on Oakland County but southeast Michigan and help us address some of the real serious employment issues that we have in this region."


The Orion plant now makes the Pontiac G6 and Chevrolet Malibu midsize cars, but the Pontiac brand is being discontinued and the Malibu is also made at factory in Kansas City, Kan.


GM also is likely to announce Friday that its Pontiac parts stamping plant will be retooled to make parts for the new car, based on the Chevrolet Spark. About 1,000 jobs could be saved there.


Michigan, Wisconsin and Tennessee all offered incentive packages to GM in an effort to lure the plant, but state and other officials wouldn’t detail the specifics.


GM had said in documents submitted to Congress that it planned to produce up to 51,000 subcompacts per year in China and ship them to the U.S. starting in 2011.


But in May, after the United Auto Workers union approved contract concessions, the company said it would build the three-door hatchback in the United States. The Spark has a small turbocharged four-cylinder engine and is about the size of a Honda Fit or Toyota Yaris. It is set to go on sale in Europe next year.


GM’s decision leaves about 1,200 Janesville and 2,500 Spring Hill employees wondering what is next for them.


The Spring Hill plant recently underwent a $600 million overhaul to build the Chevrolet Traverse, but that crossover vehicle will now be built at a factory near Lansing, Mich.


Todd Horton, spokesman for UAW Local 1853 in Spring Hill, said "no one is going to comment until we get the official announcement."


Material from the Associated Press was used in this story.

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