Reopening GM plant still a longshot
A GM official is again mentioning the possibility of reopening of its shuttered plants, like the plant in Janesville. Kyle Geissler reports. You can read more in Tuesday's Janesville Gazette.
When the Janesville GM plant was in the running for future small-car production, state and local interests put together a $195 million incentive package:
Janesville: $15 million in cash plus an offer to run GM’s wastewater facility, a value of up to $1 million a year.
Beloit: $2 million
Rock County: $20 million
Private parties: $42 million from economic development entities, health care systems and utilities.
State: $115 million, mostly in tax credits and energy efficiency grants.
JANESVILLE Despite recent comments by GM North American President Mark Reuss, industry observers say talk of reopening a plant in Janesville or Spring Hill, Tenn., is wildly premature.
Demand is nowhere near the level needed to support the massive capital investment necessary to bring Janesville or Spring Hill back on line, observers said.
Reuss in January said the automaker was looking at reopening shuttered assembly lines at Spring Hill or Janesville to resolve a short supply of hot-selling vehicles.
On Saturday, he told reporters in Florida the company is still considering its options.
Industry observers said Reuss’ comments could be management positioning of itself for upcoming contract talks. Or the comments could be a subtle message to consumers that GM is on an upswing while competitors Toyota and Honda struggle with massive recalls, they said.
Reuss said Saturday the automaker will discuss incentives with state and local governments as it decides whether to reopen a closed U.S. plant.
If that sounds familiar, it should.
The Janesville GM plant effectively closed in December 2008 when it ended production of full-size sport utility vehicles. Several months later, it found itself in a three-plant race for production of a new small vehicle.
That incentive-laden race ended in June, when GM awarded the new line of small cars to a plant in Orion, Mich.
Michigan interests reportedly wooed GM with a package worth $779 million.
A $195 million offering from Wisconsin and a Tennessee package that included $20 million in training and education money plus long-term tax breaks fell short.
That put the GM plants in Janesville and Spring Hill into what GM referred to as “standby” mode. The two plants are at the top of the list should GM ever need assembly capacity.
The Janesville and Spring Hill plants do not belong to “Liquidation Motors, Inc.,” the chunk of the old GM that’s being sold. Instead, the two plants are part of the new GM and are eligible for future production.
GM is in short supply of some of its best-selling vehicles, including the Chevrolet Equinox, Buick LaCrosse, Cadillac SRX as well as full-size pickup trucks and sports utility vehicles such as the Chevy Tahoe that was built in Janesville before production transferred to Arlington, Texas.
Reuss said Saturday it’s possible that demand could be met with added shifts and overtime, but he indicated the company is leaning toward reopening a plant that was closed as GM went though bankruptcy last year.
He said if a shuttered U.S. plant reopens, it would operate in a more flexible, innovative way.
“I’m not ready to say which plants because we’re still looking at which ones and how to do it, and that would be a conversation that would not just be internal to GM but also (with) some of the states where those plants are,” Reuss said. “What we want to do is something that may not be traditional in terms of how we do it and how we staff it and how we bring it on and off.”
While Reuss declined to give specifics, the Detroit Free Press previously reported that GM is looking to open a manual body shop in unused factory space to give the company extra production capacity without the time and expense it would take to tool a fully automated line.
“Comments such as these can’t be dismissed out of hand,” said John Beckord, president of Forward Janesville. “It’s not absolutely impossible that GM could reopen the Janesville plant, and there is a scenario out there where it could play out.
“But that’s a long ways out there, and people need to be real in their understanding of that.”
From what Beckord has learned, that scenario would include a U.S. auto industry that’s selling 12.5 million to 14 million vehicles a year. The industry now is selling about 10.7 million on an annualized basis.
“In order to add more plants, GM’s share of that and product mix would have to be absolutely right on,” he said. “That’s a tall order.”
GM has fewer than 400 workers laid off from its Janesville plant, which has been extensively stripped. Hundreds of other workers have taken early retirements or buyouts or transferred to other GM facilities.
Brad Dutcher, former president of United Auto Workers Local 95 and now a regional UAW servicing representative, said workers in Janesville shouldn’t get their hopes up that the plant will reopen any time soon.
“We’ve told our membership to take advantage of any transfer opportunities that come up,” Dutcher said.
Other Local 95 officials have agreed and said Reuss’ comments could create false hope in the community.