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GM confirms its choice of Orion plant

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JAMES P. LEUTE
June 27, 2009
— The way a General Motors executive tells it, Janesville came up two adverbs short of snagging production of small and subcompact cars away from a plant in Michigan.

But Gov. Jim Doyle didn’t dabble in semantics Friday, saying Michigan didn’t match Wisconsin’s offer in the competition for production expected to start in early 2011.


GM confirmed Friday that its plant in Orion, Mich., came out on top in the three-way competition with plants in Janesville and Spring Hill, Tenn.


“All three states made very generous offers,” said Troy Clarke, GM’s president of North American operations. “It wasn’t that one made a good one and two made bad ones. There were three very, very good offers.


“Michigan’s was a very, very, very good offer.”


Michigan offered GM tax credits of $779 million over 20 years as well as funds for retraining workers, Greg Main, president of the Michigan Economic Development Corp., told Reuters reporters in Detroit. Main said the credits will apply to future investments at all GM manufacturing operations.


The approach was necessary, Main said, because GM was driving a hard bargain that included asking for upfront cash, which the state couldn’t afford to offer.


“We needed to find a strategy to change the dynamics of the deal,” Main said.


Officials in Wisconsin and Tennessee have not disclosed the value of the incentive offers to GM, which plans to invest up to $800 million in the Orion plant.


Rock County Administrator Craig Knutson and Janesville City Manager Eric Levitt said Friday that they couldn’t divulge local incentives. A state spokesman said such a disclosure would affect future negotiations.


Clarke said state and local incentives were just one factor in a set of 12 criteria the automaker used to make its decision.


Another factor was the quality and cost associated with the local workforce, which U.S. Rep. Paul Ryan, R-Janesville, said came down firmly in Janesville’s favor.


But what Janesville had going for it on the labor side was more than wiped out by what Orion brought to the table with its paint shop, a stamping plant just down the road and nearby parts suppliers, Ryan said.


“What really matters is what GM believes, and they use their metrics and not ours,” Ryan said. “The numbers they were using on the paint shop, stamping and supplier network couldn’t be offset by our numbers on the labor side.


“And the incentive package Michigan put together … they weren’t going to lose this.”


Wisconsin Assembly Speaker Mike Sheridan, D-Janesville, said a GM official told him Friday that another factor was the economic decimation that the auto industry has wreaked on Michigan.


“I asked him if we were competitive, and he said, ‘Absolutely,’” Sheridan said of the conversation. “He said we finished in second place, which is like kissing your sister—his words, not mine.”


Doyle and others weighed in Friday with statements of disappointment in GM’s decision.


“With the help of the city of Janesville and Rock County, the state of Wisconsin offered a very strong package,” Doyle said. “I do not believe that Michigan matched us. I certainly hope that we were not used to simply leverage more resources for Michigan.”


GM announced last June that it would end sport-utility production in Janesville, which it ultimately did in December. Doyle assembled a local task force that tried to convince GM to bring a different product to the storied Janesville plant.


“The governor and the task force did a great job, and our delegation worked together like we haven’t before,” Ryan said. “Wisconsin government and the Janesville community came together like never before, but the numbers just didn’t add up for GM.”


Sen. Russ Feingold, D-Wis., said the community can take solace in the fact that the local plant is on “standby” status and could be considered for future production.


“That’s a good thing,” Feingold said. “We can still do whatever we can to help GM. The community put forth a superb effort, and we have to maintain that positive effort because Janesville is a good place for GM or any other employer.”


Sheridan said the GM official told him Janesville has nothing to hang its head about.


“We did everything we could—the task force, Democrats and Republicans working together,” he said.


“Right now, people need to move on with their lives and hope that the economy turns around and GM wants to come back here.”


Sheridan said an upshot of the small-car competition will be the strengthening of Wisconsin’s economic development toolbox. The proposed state budget includes a variety of tax incentive programs that were inserted to help Janesville but will carry over to future recruitment and retention efforts, he said.


“People have always said that Wisconsin can’t compete, but now we will have much more latitude to compete,” he said.


Wisconsin certainly competed, Clarke said, adding that he looks forward to working with state and local leaders in the future.


“Each one of these states did an outstanding job,” he said. “They’re absolute professionals and worked very hard.


“Unfortunately, we had to choose one.”



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