GM plant stuck in neutral
Podcast Episode
A federal loan to General Motors could complicate the effort to get new jobs at the Janesville GM plant. Kyle Geissler reports.
JANESVILLE — Sell it, donate it or redevelop it.
Those are the three strategies General Motors typically uses to dispose of an assembly plant it no longer needs.
But this is not a typical time for the automaker, and the short-term option of any of the three for the soon-to-be shuttered GM plant in Janesville is uncertain.
GM received $13.4 billion in federal loans earlier this year and must present President Barack Obama a viable restructuring plan by June 1 to get any more. Without more federal aid, GM's future is in serious doubt and some form of bankruptcy is possible.
The massive GM plant in Janesville is one of many pledged as collateral for GM's $13.4 billion loan.
As such, GM cannot sell, lease, donate or otherwise dispose of the 4.8 million-square-foot plant that sits on 250 acres of land.
In addition, GM must maintain the land, buildings and fixtures. Buildings can't be demolished and fixtures and other personal property must not be removed, according to the mortgage document recorded at the Rock County Register of Deeds office.
When it comes to disposing of its Janesville property, GM's hands are tied.
GM ended local production of full-size sport utility vehicles in December. Work on the plant's medium-duty Isuzu line is scheduled to end Thursday.
As a closed plant, Janesville is in a precarious position.
If GM is somehow successful in righting its ship, a local coalition has been working to convince the automaker to bring a new product to Janesville. But GM has too much capacity now, and a slimmer manufacturer likely would need even less.
Satisfaction of the government loans presumably would allow GM to do what it wants with the Janesville plant. If it has no product for Janesville, GM could sell, donate or redevelop the property on Janesville's south side.
But if GM founders and defaults on its loans, the U.S. government could become the owner of GM facilities here and elsewhere.
Local leaders have said they'd like to get the GM property under local control and move forward with some sort of reuse or redevelopment.
"I liken it to trying to sell your neighbor's car," said John Beckord, president of Forward Janesville. "You understand you might be able to buy your neighbor's car and then resell it, but you don't know that you can buy it."
That makes it difficult for the community to move forward with the property, he said.
"You've got a company that's on the verge of bankruptcy, you've got a property that's heavily collateralized and you've got a party who, quite frankly, probably isn't putting the disposition of this particular property at the top of its list," Beckord said.
If GM defaults, there's a possibility that local control would have to come from the federal government.
Administration sources in Washington, D.C., however, have told the Gazette that the government would be willing to work with GM on a suitable disposition of the Janesville plant, the saga of which Obama is well aware since a campaign stop here last year.
"Local control has its advantages and disadvantages," said Doug Venable, Janesville's economic development director. "With local control, you can be more aggressive and flexible in marketing the property, and there tend to be more state and federal remediation programs available when there is public ownership."
The downside, Venable said, is that local control would necessitate property management skills that local public officials just don't have.
And what nobody knows for sure about the Janesville site is its environmental condition.
"As a manufacturer for 80 years or so, there's a natural suspicion that there might be some environmental concerns," Venable said. "We haven't been aware of anything that's migrated off-site.
"Most of the property is capped by buildings and parking lots, and the assumption is that environmental problems have been cleaned up as the plant's expanded over the years, but we just don't know."
GM has said it will conduct a complete environmental study and remediation plan for the property prior to its disposition. But that assumes GM is still in a position to do so as the property's owner.
If GM moves into some form of bankruptcy, it's possible a judge could sell the Janesville property to the highest bidder. It's possible the buyer could be absolved of some of the property's environmental cleanup, if necessary.
"Bankruptcy judges are often most concerned with getting the maximum value for an asset," Venable said. "The judge is not necessarily making a decision on what might be best for the community."
Beckord agreed, adding that the environmental uncertainty could make redevelopment or reuse difficult for some time.
Still, local economic development officials said they will continue to work toward either a continued GM presence or an acceptable reuse or redevelopment.
While listening to proposals from the local coalition, GM has not committed future production to Janesville.
It does, however, remain committed to the best possible use of the property, plant and equipment, said Dan Flores, a GM spokesman.
"These are clearly unprecedented times," Flores said. "We take pride in being a responsible corporate citizen, and we've done that over the years in Janesville.
"Whatever the ultimate outcome is for Janesville, we'll continue to work with the community and its leaders."
Apr 22, 2009 at 5:05 a.m.
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This is off topic but look at this story in the Isthmus:
http://www.thedailypage.com/daily/articl...
Dean's honesty??? Let's have them build here!!!
Apr 22, 2009 at 3:52 a.m.
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"But if GM founders and defaults on its loans, the U.S. government could become the owner of GM facilities here and elsewhere."
"If GM defaults, there's a possibility that local control would have to come from the federal government."
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I guess as a reporter you have to be objective, but I found myself laughing profusely on that statement. Like it's really an "if" question anymore. Should just say WHEN they default on their loans.
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In any event this has been the governments plan from day one. Just a slow steps to total nationalization of the company. Mark my words the next step taken will be a massive equity stake in common stock; and the UAW will also be given huge equity stakes in the company, which of course gives them proxy, and voting rights to hand pick who ever they want on the GM board. Meanwhile the company will bleed $$$ faster then a gun shot victim, all the while the government pumps more "loans" (aka; corporate welfare) to them.
Apr 22, 2009 at 12:21 a.m.
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"I liken it to trying to sell your neighbor's car," said John Beckord, president of Forward Janesville. "You understand you might be able to buy your neighbor's car and then resell it, but you don't know that you can buy it."
Huh?
Apr 21, 2009 at 6:43 p.m.
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OnWisconsin, Beloit is ready to build that casino the day the permit is approved in Washington.
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creatureinthefreezer, I wouldn't worry about rascal's comments -- they don't even make sense. It was just trolling.
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I would hope the discussion of cleanup costs hammers in the point that it's better to prevent such contamination in the first place. There are mines in Montana where the cleanup will cost many times more than the value of the minerals extracted during the lifetime of the mine.
Apr 21, 2009 at 5:56 p.m.
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I wanted to say something about the lame tree-hugger comments by some. I'll be the first to say some of the environmental groups have some crazy ideas about protecting a bug or animal from time to time but to say that being interested in keeping our city and backyard free of chemical waste or making a company be responsible for bad decisions is being a tree-hugger. I think not! How would some of those people like it if I just dump my used oil in your front yard. Maybe a few cans of left over paint from my house. It seems to me the people that say tree-hugger probably live far away from the problem area and could care less. How arrogant and rude of you all. Grow up and take a stand for all who live in Janesville. Not just the well off friends you have.
Apr 21, 2009 at 4:58 p.m.
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Dont forget about the OTHER toxic waste dump GM will be leaving Janesville with.. Anyone besides me remember "Wheeler Pit"? the barbed wired off area of land on the corner of wright road and delevan drive? Too many people believe they cleaned up the site in the 80's, WRONG! They put a clay cap over it and cleaned up the crap on the top but what lies beneath is 50 million gallons plus of toxic sludge from the paint booths and coal burning furnaces unspent fuel. Anyone else remember this was a federal "Superfund" cleanup site??
anyone remember report of VOA's and other heavy metals sitting on top of a thin layer of rock above our coveted ground water?
In case you think im nuts or im the only one left who remembers...
http://www.epa.gov/region5superfund/npl/...
http://www.atsdr.cdc.gov/HAC/pha/wheeler...
http://www.scorecard.org/env-releases/la...
Apr 21, 2009 at 4:56 p.m.
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Nice story on an example of what can go wrong in these types of situations. Just multiply the cost time 100 in GM case with the water element. http://www.fresnobee.com/local/story/128...
Apr 21, 2009 at 4:48 p.m.
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The only answers are bad and worse. Bad if the government takes ownership because the cost to clean up the site and get it ready for resale costs you and I money. Worse if somehow Janesville takes ownership because again where is the money going to come from? You and I. Seriously folks the cost to clean up the site is hundreds of millions and once the can of worms is open there is no going back. Just do a google on the cost of some recent environmental clean ups. Years and tons of money. Sadly the low cost option is to leave the site unoccupied and as is.
Apr 21, 2009 at 2:35 p.m.
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It's not only the chemicals in the soil, it's the heavy metals like lead and mercury. I'm sure some FJ members would love to get the land to make money with, but, it's the huge clean-up liability they have to deal with. To clean it up just tear everything down, dig down 50' and properly dispose of all that soil, then bring in all new clean fill. Just remember you hit water at 10 feet.
Apr 21, 2009 at 2:27 p.m.
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Jim, nice story but you left out the most interesting part: what does the deed say that it has been mortgaged for??
Apr 21, 2009 at 1:44 p.m.
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Great content Jim - I have been carping about updates and options.
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10 years from now, as trees are growing out of GM's roof, we will Google this article and realize just how little the feds and the state has done to help the local community rid themselves of this eyesore.
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The Dana plant in Edgerton is a good example of what happens when somebody thinks a company may one day need a 1m sf building - and GM is 4x the size.
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An industrial mall? Good one. Look at the Ford campus in Chicago - they all built new stand alone facilities.
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Tear it down at the first opportunity.
Apr 21, 2009 at 1:26 p.m.
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Great. The government will end up with the property and will have to maintain it. Guess who's money is going to do that - your's and mine. So, once again we end up bailing out GM.
Apr 21, 2009 at 1:21 p.m.
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Only treehuggers will enjoy the soon to be vacant weed infested site. After a few years trees and wildflowers will spring up,and nature will try to reclaim the land. Unless there is Federal money to clean up what is in the ground, this is the way things will be for years, maybe forever. 100 years of oil, solvents, and varnishes, soaking in 200 feet down, ensures a wasteland for "grennies" to enjoy. Look at the Midwest, these places are all over, and hardly ever redevoloped. I would bet the eco-nuts are especially pleased, to see this place torn down as it made those evil earth warming Suburbans.
Apr 21, 2009 at 12:41 p.m.
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was told the area is a toxic waste dump.
Apr 21, 2009 at 12:38 p.m.
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If GM did any dumping on their site like they did with their paint sludge behind the Parker Pen factory building, there certainly is environmental concerns. This was years ago when it was probably acceptable, but the ground water there is still currently orange.
Apr 21, 2009 at 12:23 p.m.
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TheJokers DA Man =)
Apr 21, 2009 at 12:11 p.m.
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Meow meow joker..... :)
Apr 21, 2009 at 11:57 a.m.
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I am not worried. The door is still open for GM to come back and reopen the plant and hire back the workers. Mike Sheridan, Tim Cullen and Gov. Doyle are working on it and I am confident they will get GM back in Janesville.
Apr 21, 2009 at 11:45 a.m.
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"Plant Stuck in Neutral", it should have been,"Plant Stuck in Reverse". This plant has been going backward for years.
Apr 21, 2009 at 11:44 a.m.
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Put a casino there. Bet it would be built faster than the one in Beloit.
Apr 21, 2009 at 11:33 a.m.
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Well, the curb appeal aspect would likely be improved if it weren't surrounded by so much parking lot -- the legacy of its full production days. If it is ever redeveloped into an industrial mall (as I assume is the only realistic option short of leveling the site), much of that won't be needed anymore and we could get some terraces near the street with ornamental trees and shrubs, similar to a modern industrial park.
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One option might be during bankruptcy for a "bad GM" subsidiary (where "good GM" is the viable part of the company) to spin off the vacant factories into an independent property unit, which would be auctioned off in toto to a professional commercial real estate entity. They would be centrally and professionally managed. That's a decent scenario to contemplate.
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Best for us would be if a local firm like Helgesen were to get control. I'm not sure they want the headaches, though.
Apr 21, 2009 at 10:52 a.m.
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I have lived in Janesville all of my 30 some years and remember watching GM grow. I can honestly say that it is probably the biggest eyesore that I have to look at when taking my trip through the south side of town everyday. The least someone could do is clean it up a bit while it is shut down. Not just the basic internal environment issues, but it has absolutely no curb appeal and has made that part of Jackson St unbearable to drive down.
Apr 21, 2009 at 10:29 a.m.
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enviromental concern? it dont take a rocket sceintest to take a shovel across the street and try planting a bush. dig a foot down and you think your in texas with the smell of texas tea.
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