Much must happen before GM returns to Janesville

By JIM LEUTE ( Contact )   Thursday, May 12, 2011
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General Motors headquarters are shown in Detroit, Thursday, May 5, 2011. GM reported its best profit in more than a decade on Thursday.

General Motors headquarters are shown in Detroit, Thursday, May 5, 2011. GM reported its best profit in more than a decade on Thursday.

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John C. Dohner Sr.

— When General Motors laid out aggressive expansion plans Tuesday, speculation again turned to Janesville, where the automaker shuttered its 4.8 million-square-foot plant in 2009.

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.”

reader COMMENTS
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(65)
fishlove73
Sep 22, 2012 at 4:16 a.m.
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For The Record...GM closed in 2008 NOT 2009.

copo9561
May 14, 2011 at 10:02 p.m.
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These stories are not posted to actually to debate the issue of GM coming back to Janesville or not, manufacturing plants are done with Janesville , to keep moral high the Janesville gazette distributes these types of stories to get people to believe there is still hope for this city. But the reality is inevitable.

retiredfed
May 14, 2011 at 7:40 p.m.
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RichE95 - I can only speak to the states I've actually lived in and have seen the results of low income. I've seen the results in that state where union and non-union workers due the same job and the union is required to represent both to the detriment of both. As far as my view on Iowa goes, I've always thought that Iowa was big in agribusiness and less about other industrial jobs. I don’t think agribusiness has ever been a hot bed of union activity. I haven’t spent a lot of time in Iowa so that is about all I have.

RichE95
May 14, 2011 at 11:28 a.m.
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There is a tendency to compare Wisconsin with right to work states in the south. Those states were not historically industrial. Their starting point was markedly lower than Wisconsin. They are now gaining in population and income - the historic gap is closing fast. I use the example of Iowa becuase it is a right to work state in Wisconsin's neighborhood and is thus even closer to an apple to apple comparison. Does retired-fed consider Iowans as immersed in poverty compared to Wisconsin?

retiredfed
May 14, 2011 at 10:02 a.m.
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MBHammer - that really has nothing to do with right to work. That has to do with people getting paid a living wage. Unions at least strive to get their employees better wages and benefits. As I've said before right to work states tend to have depressed wages and standards of living for the working class.

MBHammer
May 14, 2011 at 9:37 a.m.
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Doesn't it bother the Right to Work proponents that the median income in America cannot purchase the median house?

rprp
May 14, 2011 at 9:22 a.m.
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I believe Wisconsin will have to change their attitude and their extremely unfair tax methods before GM returns to this state. We have to be a right to work state and either get rid of unions or restrict their power.

MBHammer
May 14, 2011 at 9 a.m.
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retiredfed, such high regard for your fellow American. As Tom Snyder used to say, "twas ever thus".

poorrichard
May 14, 2011 at 8:05 a.m.
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Dohner doesn't look like a union thug. He looks more like a union hack.

retiredfed
May 14, 2011 at 7:53 a.m.
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RichE95 – I am not defending unions. I’m sure most people can remember deadbeats at a workplace regardless of whether it was unionized or not. My point was that people who are willing to take a job in a unionized workplace, accept the benefits, and pay that the union negotiates for but are unwilling to pay dues are parasites and leeches. Wisconsin IS a right to work state in the right way. You have a right to work anywhere you want. The difference is if the place you want to work is unionized you have to pay dues to get the rewards. If you prefer not to pay union dues there are a lot of non-union places to work in Wisconsin. As far as a new housing neighborhood on west side of Des Moines the reality of new houses doesn’t equate to union or non-union or the point I was making. There were new houses in the state I moved from but there was also tremendous poverty because of the depressed wages.

MBHammer
May 14, 2011 at 7:37 a.m.
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I know that Billy, I was in a round about way pointing out that OKC never should have been closed. I was there at the meeting when it was announced by Joe Speilman that OKC was closing. He did not give us a reason for the closure. He told us that it was not us, the workforce.

melstew47
May 14, 2011 at 1:58 a.m.
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they seriously need to close their mouth,cuz all it sounds like is blah,blah,blah then big piles of crap just falls out,lol.if janesville is not considered,why even get these peoples hopes up,and thats all theyre doing,so either put up or shut up.have a nice day.

RichE95
May 13, 2011 at 4 p.m.
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Thanks Billy for the update on Oklahoma. retired fed - "union officials - hard work" ??? Is that what you call sleeping in the union office on double time because a contractor is in the plant? Encouraging workers to write thousands of grievences? I suppose that does take some effort. As far as right to work states go - I wonder who lives in all the new homes and shops at all the new stores in Iowa (a right to work state). Go the west side of Des Moines and take a look.

BillyDurant
May 13, 2011 at 3:37 p.m.
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OKC is no longer owned by General Motors Company or Motors Liquidation Co. (or "Old GM"). The State of OK purchased it and now leases it to the Air Force.

copo9561
May 13, 2011 at 3:12 p.m.
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Joan>thanks again for elaborating on your fantasy world.

retiredfed
May 13, 2011 at 2:54 p.m.
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taxandspend - in a right to work state as you appear to hope that Walker creates here non-union members benefit from the hard work of union officials and the dues the union members pay while they get by without paying. Do I understand you correctly? In my opinion, the people like that are parasites and leaches. Their willingness to accept the benefits without paying dues hurts the union and non-union workers alike. Corporations are the only ones who make out in right to work states. I recently moved back to Wisconsin from a right to work state. Everyone’s wages except Corporate Executives in that state are depressed. I hope Wisconsin is never foolish enough to chase the South to the bottom of the economic ladder.

RichE95
May 13, 2011 at 11:47 a.m.
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I agree that the facility is old. That will work against Janesville. I was at the Saturn facility in Tennessee and it was like a campus. They certainly would seem to be the first choice. However, the bottom line, especially if GM breaks clear from the government, is total cost. That can overtake the age of the buildings. The other problem seems to remain that the voice of GM in Janesville remains the UAW. GM allowed the union to be that voice a number of years ago and it didn't bode well. The last Plant Manager even chose to live in Illinois. It was as if they were already writing off Janesville. A new local contract after the closing was set was also a sad commentary. Whatever, as the article pointed out, GM will have to be much stronger than now for Janesville to have a chance.

MBHammer
May 13, 2011 at 11:13 a.m.
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It would be a stupid decision to open that old structure when you consider much more modern facilities that GM closed.

RichE95
May 13, 2011 at 10:50 a.m.
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I agree that it was an excellent article. It pointed out facts overlooked in many comments. When training was underway for the Medium Duty Truck one of the trainers was an old GM hand. He made the point that job security at a plant requires that every square foot possible be utilized for every hour possible with the manufacture of product. GM management seems to have finally got that message. It means that the new GM must grow much bigger and sell much more before Janesville will be considered. The only glimmer of hope is the retention of the plant in the new GM Oklahoma City is not part of the new GM and will never be considered. It was a newer plant but my understanding is that something went wrong with the relationship between GM and the State of Oklahoma over taxation.

spark
May 13, 2011 at 10:48 a.m.
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Oreally - Doyle failed at convincing them also. GM's failures is not the fault of the Government and they should be damn happy they were bailed out.

Oreally
May 13, 2011 at 10:45 a.m.
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Governor Scotty Walker says that "Wisconsin is open for business." Too bad he lacks the ability to convince General Motors of that. GM execs don't seem too impressed by his punkish, peevish approach to governance.

Joan
May 13, 2011 at 10:35 a.m.
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Jim - I want to point out that some of the plants with remaining capacity can only produce existing products. So, if they want to produce more Silverados, they would have to open up another plant since Fort Wayne is maxed out.

I would love to see an analysis of forecasted demand vs. existing capacity taking that into consideration.

Thanks again Jim! Great article.

westorbust
May 13, 2011 at 10:28 a.m.
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...I'll qualify the quality product with an "affordable price". Wages have stagnated horribly in the last 20 years. Not everyone can shell out +30k for a car, truck or van. Make a vehicle that is a little more stripped down (leave in the A/C) and can fit a family in it that is still a quality build, and realize that gas will never go down that much ever again. People will buy it.

westorbust
May 13, 2011 at 10:20 a.m.
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I would be careful not to rule out the Janesville plant coming back at some kind of capacity. Only GM knows what it needs. What they would have here is a very eager workforce. I have a feeling old Scotty would grease the treads quite nicely for them as well though I'm sure there have been overtures on WI's part, just as before.

American's need to make things. Everyone can't go to college, push papers and administrate. Nothing wrong with getting your hands dirty, and I hope GM remembers that about Americans. It's all academic without products that are on par with their competitors. Right now Ford's doing pretty well, which is good for GM. I think more people would buy American cars if they felt the quality was better. After my last two GM vehicles, I would be less likely to buy another, but I'd give them another chance if they can come out with a decent product and put American's back to work.

tracco6
May 13, 2011 at 10:01 a.m.
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Tenn.is still running in some capacity.Parts or engines or something.Its also a newer plant.I believe Janesville needs a upgraded paint area,and thats nine figures at least.But I believe Tenn cant run the bigger vehicles pick ups etc.

johndenver
May 13, 2011 at 9:55 a.m.
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Joan - You cannot be serious?

JimPI
May 13, 2011 at 9:46 a.m.
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Honestly, can't we go one single issue of the newspaper without mention of GM somewhere in it?

danias
May 13, 2011 at 9:03 a.m.
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916WI the people at the plant are skill trades they are there until contract! Not sure why and a couple of security people are there too. To make sure nobody try's crashing the place.

spark
May 13, 2011 at 8:39 a.m.
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Joan - I hope they do reopen here someday. However, being put on standby does not guarantee they will eventually open.

Joan
May 13, 2011 at 8:37 a.m.
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One more comment - wow - lots of people think this is never going to happen. I can't wait to laugh at all of you naysayers when it obviously will. They put GM on standby status along with Tennessee. Is that not clear? Means they will open eventually, and now it looks like sooner rather than later.

I can't wait to laugh!

Joan
May 13, 2011 at 8:28 a.m.
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Jim - thank you for the great, thorough analysis. I should have been more patient! I thought the Gazette was refraining from running this story. Instead, you were just doing a bang up job.

I should know better!

bigdaddy2
May 13, 2011 at 7:26 a.m.
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so they are having a good couple of years, with what happen over in Japan that will help GM out alot. But they will crash again, just give them time. Japan still makes a better car, and no union in the back room stealing all the profits from the Automaker. Once again give it up Janesville it won't happen.

Sigma40
May 13, 2011 at 7:09 a.m.
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Then why form an opinion then? If it will or it wont.. neither you nor I know. Do you think it will happen before the world ends in 2012?

in_my_opinion
May 13, 2011 at 5:49 a.m.
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I'm not sure what I find more irritating! The Gazette for insisting on running these stories or the people who actually think it's going to happen.

Rocky
May 13, 2011 at 5:38 a.m.
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Never...gonna...happen.

MBHammer
May 13, 2011 at 12:21 a.m.
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No offense but it would be ridiculous for GM to reopen the Janesville plant, an obsolete structure compared to the OKC plant where I worked that was spacious and modern by comparison, a 460 acre site that was closed down with never a reason given as to why it was closed. I work at the Kansas location and it is like working in a phone booth compared to the OKC facility which had a much better floor layout. It would seem very, very odd if they did open the old Janesville barn for business.

Bond
May 12, 2011 at 11:35 p.m.
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First and foremost G overnment M otors need to pay back the taxpayer bailout money!

TheMaskedCommenter
May 12, 2011 at 11:01 p.m.
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"Much must happen before GM returns to Janesville"

Yes, swine must evolve to the point where they have wings and learn to fly.

To quote Dr. McCoy, "I'm a doctor, Jim, not a veterinarian! This horse is dead!"

factsplease
May 12, 2011 at 10:57 p.m.
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I won't be holding my breath.

prizefighterinferno
May 12, 2011 at 10:10 p.m.
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Question, will they need additional bailout money to fund the plant reopening?

janesvillean
May 12, 2011 at 8:30 p.m.
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The building still has equipment inside that is being legally salvaged by contractors -- that was the word last time this came up.

anonomouse
May 12, 2011 at 7:48 p.m.
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This horse has been beat to death, I see the gazette has dug up the carcass for more beatings. GM isn't coming back, atleast not anytime soon and if they do don't expect the high dollar wages

916WI
May 12, 2011 at 7:24 p.m.
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Woodsmen....Those people are most likely squatters who are not working at the plant, but living in it. If they left their cars outside they would either get vandalized, towed because they were suspected of being abandoned, or completely lost in the forest of weeds the parking lot has become........

woodsman
May 12, 2011 at 7:15 p.m.
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Think about it,people working right now at the Janesville plant, parking on the inside so the long necks can't see them,i believe it's going to happen,soooooooooooon!

usaret
May 12, 2011 at 6:40 p.m.
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The party is over now let's move on.

TCB
May 12, 2011 at 6:29 p.m.
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GM Assmebly is never returning to Janesville. Its over it was a nice run. But its over.

TheJoker
May 12, 2011 at 6:09 p.m.
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Did I miss something? Why is Dohner saying "the good news for Janesville is that they are still talking about us." Huh?! Where are they still talking about Janesville? Not in this article and not from any GM folks.

hdonlybob
May 12, 2011 at 6:07 p.m.
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Here we go again....yawn.....

janesvillean
May 12, 2011 at 5:36 p.m.
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Gas prices by themselves do not affect overall automotive sales that much. They do affect WHAT people buy. For example, if gas prices rise, it may make sense to trade your SUV in for something with lower mileage. GM now has cars like the Cruze that are not just gas-sippers but have better overall amenities and build quality than the company used to offer.
.
The industry generally seems to feel that pretty much evreything GM has done post-bankruptcy has been good for the long term (partly because GM was in so much trouble long-term because of its steadily shrinking sales and high man-hours-per-car), but it's very hard to say if it's really good in the short term, because the short term is dicey even for the automakers in good shape like Ford and Toyota.
.

Sigma40
May 12, 2011 at 5:31 p.m.
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poorrichard - Its about the only real car GM has left. No one wants disposable front wheel drive junk. At least a vette will be worth something 10 years after you buy it. Who wants to spend $20k on a car that in 7-8 years is worth $1500. ?
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Also thank the govt, the tree huggers,DOT, NTSB, and the EPA for cracking down on all the emissions (costly $$$$) making them cut power and reduce emissions and then adding all the weight for safety BS making them get crappy mileage. Cars are expensive, people are jobless all because of peoples paranoia of gloBULL warming and crap....which is a made up thing to drive prices up.

copo9561
May 12, 2011 at 5:09 p.m.
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Does this respected industry analyst fly with pigs

dkush21
May 12, 2011 at 4:48 p.m.
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Well, these big companies and CEO's keep getting more and more profits. They can afford to get as many Corvettes as they want.

poorrichard
May 12, 2011 at 4:36 p.m.
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How can GM add 250 jobs at the Corvette factory? Who is buying these $55-70K cars-boy I wish I could. More power to em.

redtop49
May 12, 2011 at 4:34 p.m.
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A 2 year Degree to work on a assembly line at 14.00 dollars an hour, good luck finding that worker.

dkush21
May 12, 2011 at 4:25 p.m.
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Nothing will be opening again if they don't get the price of gasoline situation under control!

jvldss
May 12, 2011 at 4:04 p.m.
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Oh geez!
Here we go again.
Another car rolls off the Fagan lot and suddenly GM is reopening again.

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