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Future of Janesville GM site remains uncertain

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Photo by Dan Lassiter

The Janesville GM plant this month.

JANESVILLE — Very dark, very cold, very spooky.

That’s how a recent visitor describes the General Motors assembly plant in Janesville.

Thursday will be the two-year anniversary of the day GM stopped building light-duty sport utility vehicles in Janesville.

More than 1,300 workers left the plant two days before Christmas with the knowledge that they wouldn’t return. In doing so, they joined hundreds of others at companies that supplied the local plant, as well as the 1,300-plus people laid off earlier that year when GM ended second-shift SUV production.

With a relative handful of employees left behind, GM produced its last medium-duty truck four months later and turned out the lights on a storied production run that spanned 10 decades in Janesville.

While the displaced workers have moved on, the hulking plant that was the spoke of the local auto industry sits idle, housing only a small security detail.

“You get a very eerie feeling walking around in the plant,” said John Beckord, president of Forward Janesville, a private economic development group with a strong interest in the property’s re-use, either by GM or someone else.

“You wonder if the walls are talking.”

Over the last 20 months, Beckord and others have talked with GM about the future of the 4.8 million-square-foot building that sits on 250 acres.

For the most part, however, their hands are tied. Any decision rests with GM, which isn’t likely to make one without input from the United Auto Workers—at least until the current labor contract expires in September 2011.

When it went through bankruptcy, GM retained the Janesville plant, categorizing it and an assembly facility in Tennessee as “standby” plants that would be the first back in production if the automaker needed more space to build cars and trucks.

While the auto industry is growing once again, GM hasn’t tapped either Janesville or Spring Hill, and it’s mum when it comes to predicting the future or talking about the status of the local plant.

GM spokeswoman Kim Carpenter said the automaker continues to monitor its manufacturing footprint and will adjust it to meet market demands. Right now, GM needs the Janesville plant in “standby” status, although that could change in the future, she said.

“From our perspective, not a lot can be accomplished until such a time when GM says they don’t need it anymore,” Beckord said.

Several companies have looked at the plant, he said. Nothing has materialized.

That’s understandable, given that GM’s focus is squarely on its reinvention.

“We met with them last spring, and everything was hunky-dory,” said Vic Grassman, Janesville’s economic development director. “But then the lead guy got transferred, and the new guy hasn’t returned an e-mail.

“Right now, we’re just a fly on the wall to them.”

Future possibilities

Re-use of the Janesville property likely would follow one of two scenarios, or, perhaps, a combination of the two.

The first would involve a return of some sort of GM production. Some industry observers rule that out, arguing that if more capacity is needed, GM will continue to consolidate in Michigan, a state that’s lavished the automaker with tax incentives others can’t match.

Others, however, point to a resurging industry that might need to tap empty auto plants, even if it would mean an investment of hundreds of millions of dollars in Janesville.

The second scenario involves GM deciding it no longer needs the Janesville plant and agreeing to either sell or donate the property to the community or a third-party developer.

In the latter scenario, local officials would work on a redevelopment plan that includes several tenants involved in manufacturing, warehousing, distribution and other activities.

But with local control would come tremendous challenges, primarily the costs associated with a redevelopment plan and cleaning up environmental contamination.

Such a plan undoubtedly would involve environmental lawyers, real estate developers and other professionals involved with everything from the condition of the building’s infrastructure to its road and rail access.

On his recent visit to the darkened plant, Beckord carried a flashlight. He noted that strong steel and concrete still support the facility. But the roof leaks, and, as time goes by, that concerns him.

“The foundation is still there, and if you could find the right user …” he said.

Beckord, however, is a realist. Nationwide, the demand for buildings approaching 5 million square feet is nonexistent.

“The supply of available space in this country is enormous,” he said.

That lends itself to the idea that the property could be split up and used as a campus by several companies.

Would it be built to order or developed on speculation?

“There’s a massive expense in any of that,” Beckord said.

Grassman can envision the property, or at least part of it, as a multimodal hub. Given the property’s rail service, it could be a distribution point where trucks are put on trains for distribution.

“That’s just one thought, and it’s not one that has been analyzed at all from any economic development perspective,” he said.

Elephant in the room

An Obama administration official visited in June to see how the federal government could help Janesville, one of several communities hurt by the downturn of the domestic auto industry.

Shortly thereafter, Grassman and others met with representatives from the Environmental Protection Agency and the Wisconsin Department of Natural Resources.

Environmental concerns associated with the local plant are legendary, fueled primarily by generational talk of buried vehicles and waste such as paint and toxic solvents.

“They said that they would love to work with us,” Grassman said. “Our strategy was to get going so we wouldn’t lose a year, but the problem is we can’t get on the property.”

Linda Hanefeld, the DNR’s remediation and redevelopment team supervisor in southcentral Wisconsin, agreed that access is difficult.

“We don’t have the authority to just walk onto the property,” she said.

Ideally, she said, DNR officials would be allowed access to GM data to see what type of materials could pose environmental problems. Based on that, the department would start drilling for samples and follow up with remediation plans, if necessary.

“We’ve been involved and had discussions with the city, county and GM reps,” she said. “The city has a relationship with GM, so we’re really letting them take the lead.

“We want to work with all parties to get the best outcome.”

A fighter to the finish

So, too, does Rep. Mike Sheridan, who for six years has represented Janesville in the Assembly, including two years as Speaker.

Sheridan made a trip to Detroit on Thursday to meet with GM officials, one of his final acts as a state lawmaker.

He went armed with lists of questions and ideas formulated from GM people—union and management—back in his district and with the blessing of Gov.-elect Scott Walker.

“It’s part of my ongoing effort to keep the dialogue open between GM and the state of Wisconsin,” said Sheridan, who worked at the plant for 31 years and served two terms as president of United Auto Workers Local 95.

“Until they take a bulldozer to it, I’m absolutely not giving up on that plant.”

GM PLANT IN A 'COLD STATE'

The local rumors pop up every few months or so.

This general contractor or that electrical company is spending a lot of time inside the shuttered General Motors assembly plant in Janesville.

It’s just a matter of time, those doing the talking say, until the local plant returns to production.

Steve Brock is familiar with the rumors. As a GM manufacturing director, one of his responsibilities is for idled production facilities.

“In the last few months, there has been more activity at Janesville as we’ve gone in with local GM-UAW folks who have been laid off and a small group of contractors to handle a number of equipment requests from other locations,” Brock said.

The workers, Brock said, have been removing equipment, not adding it.

In 2009, GM identified and inventoried assets at the Janesville plant, he said. While much of it was removed and shipped to other plants, a lot of equipment remains.

“A lot of it is very product specific, so it’s been shipped to facilities that can use it,” he said.

Most of the plant’s mechanical systems have been shut down to make the facility as secure as possible, he said.

In addition to a security company, the plant is staffed by a GM site manager and an environmental engineer.

“The plant has been put into what we call a cold state,” Brock said, adding that routine maintenance isn’t necessary because the internal systems aren’t operating.

“The analogy I like to use is what you would do with your cottage up north as you prepare for the winter,” he said. “You shut everything off.”

The amount of manufacturing equipment that remains in the plant is hard to describe, Brock said.

But it certainly has decreased, as has the amount of ancillary equipment needed to run a business

The amount of taxable personal property inside the plant dwindled from about $5 million in 2009 to less than $250,000 this year.

Personal property is machinery and equipment used for nonmanufacturing purposes such as furniture, fixtures, office equipment and supplies. It does not include machinery and equipment used exclusively and directly in the manufacturing process, which is tax exempt.

GM spokeswoman Kim Carpenter said the automaker does not have a timeline for the Janesville plant, one that either returns it to production or disposes of it.

If needed, she said, the plant could be readied for production.

“Just because things have been removed doesn’t mean it isn’t possible,” she said.

But if that’s the case, it will take time, Brock said.

GM still owns several taxable properties in Janesville, but the two most significant are the plant proper and the adjoining “JATCO” distribution yard it bought in 2005.

Property records show that in 2006, the automaker owned real estate assessed at $30.9 million and personal property valued at $6.1 million for a total of about $37 million. That generated property taxes that added nearly $750,000 to local coffers.

For the 2010 tax year, however, GM’s total assessment has fallen to $12.6 million, 98 percent of which is attributable to real estate holdings. Ten years ago, the total assessment was $53.5 million, and 73 percent of it was levied on real estate holdings.

This month, eight tax bills were mailed to Detroit for a total of $326,000, less than half the amount levied four years ago. Taxes due on the main plant property total $253,000, while those due on the former JATCO parcel are $59,000.

Stephanie Marquis is a spokeswoman for the Wisconsin Department of Revenue, the state agency that assesses all manufacturing properties in the state.

The assessed value of the GM properties has fallen for several reasons, she said.

The department assesses properties based on their “highest and best use,” and clearly the GM plant is at neither, she said, adding that the economy also has affected property values.

“It’s a very special-use property that’s vacant and not in use,” she said. “The building is older, and it’s not being maintained as it was previously.

“It’s an auto assembly plant, and for any other company that’s not an automaker, it would require an awful lot of money.”