Much must happen before GM returns to Janesville
Talk of the automaker reopening its Janesville plant anytime soon is wildly premature, but a respected industry analyst said it could happen, but only if cars continue to sell and GM does a number of other things.
With a recent surge in sales, GM said Tuesday it will spend $2 billion at assembly and component plants, creating or preserving more than 4,000 jobs at 17 facilities in eight states.
GM Chairman and CEO Dan Akerson said the company would invest $204 million and retain about 250 jobs at a transmission plant in Toledo, Ohio. That’s on top of an announcement last week in which GM said it would spend $131 million for plant improvements and 250 new jobs at its Corvette-making facility in Bowling Green, Ky.
Those two announcements account for nearly 17 percent of GM’s planned financial investment and nearly 13 percent of its workforce goal.
Beyond that, the automaker is mum on its plans, saying it will make specific facility investment announcements in the next few months.
The plant in Janesville is not likely to be included in those announcements, said industry consultant David Cole.
That’s because the automaker is much more likely to invest in plants operating below capacity.
Among GM’s 11 assembly plants, only four are running at their three-shift capacity.
They include plants in Flint, Mich., (heavy- and light-duty pickups); Lordstown, Ohio, (Chevy Cruze); Lansing, Mich., (Chevy Traverse, GMC Acadia, Buick Enclave), and Fort Wayne, Ind. (Chevy Silverado and GMC Sierra pickups).
Six others are operating either one or two shifts and have room for expansion if the market demands.
Taken together, the 11 assembly plants are operating at about 71 percent of their capacity. Based on current employment levels at the plants, full capacity would require another 6,300 workers.
Cole said the key to successful manufacturing is to run a plant all the time.
“The foundation is there for GM,” said Cole, chairman of the Michigan-based Center for Automotive Research. “The goal is to get everything to three shifts and make each plant as flexible as possible to be able to mix and match production to meet market demands.
“They are on the right track, doing the plant upgrades and hiring people at existing plants.”
GM’s U.S. sales through the first four months of the year are up 24.8 percent over 2010, and the company last week reported its fifth consecutive profitable quarter since emerging from bankruptcy reorganization in July 2009. For the same period, the company reported domestic market share of 19.6 percent, up from 18.7 percent for the same period a year ago.
Cole said that’s impressive, and the domestic automakers are taking advantage of troubles plaguing Japanese automakers.
GM soon will enter contract negotiations with the United Auto Workers to replace a contract that expires in September. The current contract allows GM to hire new workers at $14 an hour, about half what it pays existing hourly employees.
The two-tier wage scale is expected to be a major topic at the bargaining table.
GM said Tuesday that laid-off employees will fill about 1,350 of the 4,000 jobs the automaker plans to create or retain. Once those workers are recalled, the remaining positions will go to new hires at the lower wage rate.
“The UAW’s goal has been to return all laid-off workers to active status and see the company begin hiring again,” said Joe Ashton, a UAW vice president. “These announcements will create and retain thousands of jobs and bring General Motors back to full employment of our hourly workforce.
“If the market continues to recover, we are confident that GM will hire new workers to meet the strong demand for the products our UAW members build.
John Dohner Sr., president of UAW Local 95 in Janesville, noted that neither Akerson nor Ashton said anything about reopening the Janesville plant. He agrees that the automaker’s expansion plans likely will target plants—assembly, stamping and powertrain—that are currently in operation.
In the long run, Dohner Sr. said, that could be good news for Janesville. As GM fills capacity at its existing plants, Janesville becomes more appealing as one of just two plants on standby. GM’s plant in Spring Hill, Tenn., is the other.
“When we met with Ashton a couple of months ago, our message to him was to keep Janesville in mind as they talk about a new contract and not let us move into closed-plant status,” Dohner said.
“The good news for Janesville is that they’re still talking about us.”
Dohner said a handful of skilled trades workers from the Janesville plant remain on layoff.
“Beyond that, all the assemblers are either retired or gone somewhere else,” he said.
If GM were to suddenly reopen the Janesville plant, some former workers might have a chance to return, but most gave up that option when they accepted higher payments to move to other plants, he said.
And, he noted, all of that could change as GM and the UAW hammer out a new deal.
Cole said that as GM adds capacity at its existing plants, the standby plants in Janesville and Spring Hill move up the list.
“I think it’s important for the community of Janesville to make sure its workforce is educated,” Cole said. “It will take at least a two-year community college degree to work on the line.
“Whether it’s GM or someone else, modern, high-tech manufacturing demands a much more educated workforce than it did 30 years ago.”
Cole expects GM to bring the Spring Hill assembly plant back on line before it taps Janesville, primarily because the Tennessee plant is newer and has a stamping operation.
“I think things are heading in the right direction for Janesville,” Cole said. “Just don’t count on it happening next week.”