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A Site Selection Web Exclusive, August 2011
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GM’s Summer of Love

Driven by efficiency gains, fuel-efficiency goals, promising sales and pure momentum,
GM spends its summer spending money on its plants.

by ADAM BRUNS
ONLINE INSIDER
General Motors Toledo Transmission Plant employees applaud GM’s May 10 announcement of a $2-billion investment in U.S. assembly and component plants, creating or preserving more than 4,000 jobs at 17 facilities across the country.
Photo by John F. Martin courtesy of General Motors

Summer's been no vacation for General Motors. And that's just fine with all concerned.

If you didn't know any better, you might think GM's primary physical plant projects involve the 89 facilities in 14 states that it had to shut down, now being marketed for redevelopment by the Revitalizing Auto Communities Environmental Response Trust. But even as those sites await their futures, they are at least part of the way into the past for GM.

General Motors President North America Mark Reuss (left) and United Auto Workers Vice President - General Motors Department Joe Ashton talk during a May 25 press conference where GM announced it will add two shifts and approximately 2,500 jobs at the Detroit-Hamtramck assembly plant to build the new Chevrolet Malibu mid-size sedan and the next-generation Impala large sedan alongside the Chevrolet Volt and Opel Ampera electric cars.
Photo by Steve Fecht courtesy of General Motors

Earlier this month the company posted its sixth consecutive quarterly profit ($2.5 billion) since exiting bankruptcy in July 2009. Since that point on the calendar, the company has invested $3.4 billion in its still-active plants.

Starting on May 4, the company embarked on a new wave of projects across the U.S. that will total another $2 billion in investment at 17 facilities in eight states when all is said and done, retaining or creating 4,000 jobs in the process. The timing of the announcements has been dependent on completing incentives negotiations with local and state authorities.

Like many a young and hopeful driver, the company launched its summer of love in a Corvette. That is to say a Corvette plant, as GM announced a $131-million expansion and refurbishment project at its flagship Corvette manufacturing facility in Bowling Green, Ky., where it will create 250 new jobs. A new Corvette model is expected to hit dealer showrooms in mid-2013.

"Our announcement today is possible thanks to our great partnership with the Commonwealth of Kentucky, the Bowling Green community and the UAW," said Mark Reuss, GM North America president, as the state's Derby Week got off to a galloping start. "It represents our commitment to this plant, this area, and this nation."

General Motors began production of the Corvette in Bowling Green in 1981. The 1-million-sq.-ft. plant remains the model's exclusive home, and today employs around 500 people, paying out $36.5 million in wages, $7.75 million in payroll taxes and $230,000 in property taxes. In 2010, legislation was passed making the Corvette Kentucky's official state sports car.

More meaningful to this project, the Kentucky Economic Development Finance Authority preliminarily approved the company for tax incentives up to $7.5 million through the Kentucky Business Investment program. The performance-based incentive allows GM to keep a portion of its investment over an eight-year period through corporate income tax credits and wage assessments by meeting job and investment targets. 

The next project popped up the following week in Toledo, where GM's physical plant got its start approximately 65 years before Bowling Green's. Chairman and CEO Dan Akerson announced on May 10 a $204-million investment and retention of 250 jobs for the development of a new 8-speed automatic transmission.

On May 13, the reinvestment tour surfaced in Flint and Bay City, Mich., where GM will invest $109 million and "protect or add" 96 jobs at the two sites. The project follows a November 2010 announcement to invest $151 million and protect another 143 jobs at the two plants.

"This investment marks the second major increase in engine and engine component output in less than six months — a sign that GM is moving quickly to meet growing demand for more fuel-efficient cars," said Terri Burden, Flint Engine Operations plant manager.

Of the $109 million, $84 million will be used at Flint to increase Ecotec 1.4-liter engine capacity. Bay City's investment of $25 million is for connecting rods and camshafts used in the engine. Later this year, the 1.4-liter engine will be installed in the Chevrolet Sonic, which will be built at GM's assembly plant in Orion Township, Mich.

Back on the Rollercoaster

On May 25, the biggest job creator (or re-creator) of them all came to the company's Detroit-Hamtramck facility, where GM is adding two shifts and about 2,500 hourly and salaried jobs to build the new Chevrolet Malibu mid-size sedan and the next-generation Impala large sedan alongside the Chevrolet Volt and Opel Ampera electric cars. The jobs will be filled by laid-off UAW members with the possibility of new hires to follow. At the time of the announcement, the plant employed 1,121 people.

The boost in shifts comes with a $69-million investment, following on an April 2010 $121-million investment to support Malibu production.

GM had announced the previous week that after a four-week shutdown, the Detroit-Hamtramck plant will exclusively build Volt and Ampera electric cars with extended-range capability for the rest of the year.

The very next day, May 26, the GM spree hit Arlington, Texas, where the company said it would add 110 jobs and invest $331 million to purchase tooling and equipment and expand the Arlington Assembly Plant to make future Chevrolet Tahoes, Suburbans, GMC Yukons and Cadillac Escalades. In other words: big vehicles from the state that loves all things big.

The Arlington investment is primarily for manufacturing machinery, equipment, special tooling and an expansion of the current facility. The plant, which opened in 1954, was last expanded in 2001, to 3.75 million sq. ft., and recently surpassed the 9 million mark in vehicles made. At the time of the announcement, it employed 2,400.

Data and Dreams as Drivers

The investment train momentarily stopped for Memorial Day. Before it got back up to speed, Reuss delivered a talk on June 2 to the Mackinac Conference on Michigan's famously un-motorized Mackinac Island, where, he joked, "in all honesty, this absolutely has to be … the worst retail market we have anywhere in North America. I mean, we haven't sold a vehicle here for… ever."

In his talk, which he informally titled "What if ….?," he addressed how GM, in addition to plant investments, is backing that up with human capital investments, including a $27.1-million contribution by the GM Foundatin to seven high schools in the Detroit area to subdivide them into smaller academies and better prepare students for graduation and higher education. Among those schools is Hamtramck High School.

And we announced, through the GM Foundation, a $27.1 million contribution to seven different deserving high schools in the Detroit area to subdivide them into smaller academies and give the kids more attention and instruction and really help them graduate and prepare for higher education.

"These are kids the same age as mine, and they deserve their shot in life, just like everyone else's," said Reuss in reading from notes he'd received from students after the investment. "It helps you really understand that you're making a difference. And it makes you want to do more."

He called on the assembled community leaders from across the state to ask their own "what if" questions to jolt the state back to its leadership position. And he detailed other future-minded ideas, such as GM's EN-V (electric, networked vehicle) urban mobility concept, which it had unveiled at an industry confab in Shanghai.

"In Shanghai, and other crowded cities around the world, a pilot program would be considered a test of autonomous personal vehicles aimed to solve the issue of crowded streets and horrific, choking congestion. And we have cities that are interested in conducting a pilot program for that very reason," he explained. "But what if… we did a pilot program in Detroit? Such a program in Detroit would serve a very different purpose. It wouldn't be to solve a congestion problem or overcrowding — it would be to help bring us together. It would be to provide an effective means to connect us easily to each other and quickly to places of interest that are spread out across a vast region."

Summer's Here and the Time is Right

That region quickly welcomed another GM project on June 6, one that curiously tied in rather well with Reuss's futuristic vision: a $130-million data center at its Technical Center campus in Warren, Mich., where it is expanding and renovating a former administrative building and adding 25 jobs. The project's final phase is scheduled for completion in 2015.

"The investment will result in an energy-efficient, state-of-the-art Information Technology (IT) Operations and Command Center that consolidates GM's IT infrastructure, reduces operating costs and cuts energy use by 40 percent," said the company. "The new enterprise data center will contain IT laboratories and serve as a hub for monitoring GM's digital applications globally. Its modular design enables future expansion for handling the increasingly complex computer simulations needed to keep pace with faster design, fuel economy, safety, and quality requirements."

Two days later, on June 8, GM said it would invest $49 million to purchase tooling and equipment for the Bedford powertrain plant in Indiana to produce components for the 8-speed transmission and a future small engine program. The investment will create or retain 91 jobs.   

The plant, which opened in 1942 and employed 405 at the time of the announcement, is one of the leading aluminum die casting facilities in the world, using the process to manufacture transmission casings and converter housings.

A busy week ended on Friday, June 10, when GM said it would spend $47 million on equipment at its parts plant in Defiance, Ohio, in order to make more components for the 1.4-liter engine. The project did not create any new jobs at the plant, which employs 1,300.

A short weekend later, GM was in Kansas City, Kan., where on June 13 it said it would invest $20 million in machinery and equipment for its Fairfax Assembly plant to add future technologies and improvements to the Buick LaCrosse including eAssist, a light electrification technology that will boost highway fuel economy by 25 percent.

The plant, which opened in 1987, is home to the LaCrosse and the Chevrolet Malibu. With more than 3,900 employees, the Fairfax plant is the largest employer in the Kansas City metro area.

On July 11, GM pledged $33 million and 100 jobs created or retained in Tonawanda, N.Y., and $32 million and 63 jobs created or retained in Spring Hill, Tenn., for powertrain manufacturing technology backing the Ecotec four-cylinder engine.

In Tonawanda, the additional capacity is being added for engines used in the Chevrolet Equinox and GMC Terrain crossovers. In Spring Hill, the engine plant is adding capacity for direct-injection four-cylinder engines to support the 2013 Chevrolet Malibu. The next-generation Malibu is scheduled to start production in early 2012. It will be sold in about 100 countries on six continents, and will be assembled at the Fairfax and Detroit-Hamtramck plants in the United States, as well as other plants around the world.

GM also announced that its Saginaw Metal Casting Operations will export aluminum castings for the lightweight Ecotec 2.4L engine that is used in fuel-efficient vehicles like the Opel Antara and Chevrolet Captiva in Asia. The Saginaw work will create or retain 53 jobs.

On July 12, GM said its powertrain plants in Toledo and Bedford, Ind., would receive most of an additional $129-million investment. Toledo will get an additional $83 million for enhancements to a six-speed transmission already produced in the plant. The new money will support addition or retention of 30 jobs at the plant that employs about 1,600. Bedford is receiving $32 million for enhancements to the die-cast case and torque converter on the six-speed transmission assembled in Toledo. Bedford's employment of 405 is unchanged by the new investment.

Separately, an investment of $15 million to $20 million is planned that will retain 60 jobs at the GM Components Holding plant in Wyoming, Mich. The investment will support various powertrain projects.

Once and Future Kings

Finally, on July 18, the city most identified with the industry's diminution received a major boost, when GM said it would invest $328 million to prepare its plant in Flint, Mich. to build the next generation of Chevrolet and GMC full-size pickup trucks, creating or retaining 150 jobs.

The plant, which currently has 2,047 employees, currently builds the heavy-duty versions of the Chevrolet Silverado and GMC Sierra, sales of which contributed 2.4 percentage points of market share through May, bringing GM's total heavy-duty market share to 36 percent. 

All told, the summer projects tally $1.7 billion, leaving $300 million worth yet to come. "We still have another announcement, but we haven't defined timing for that yet," says GM spokesperson Kimberly Carpenter. In the meantime, Canada has gotten in on the action, as GM announced during the first week of August that it would invest $117 million ready its assembly plant in Oshawa, Ontario, to build the new Cadillac XTS luxury car, securing 400 jobs at a 4,500-worker plant (GM's largest in Canada) that had to cut more than 1,000 workers during the big industry downturn.

Overall, Michigan has been a major beneficiary in the current round of investments, designated for $744 million. In his forward-leaning talk on Mackinac Island, Mark Reuss harkened to the day when GM, known for its World's Fair "Futurama" displays, and its home city and state were known for their innovation. And he said the time and conditions might just be right to rise again, perhaps driven by the EN-V mobility concept.

"In short, it's a sustainable system of personal mobility units, operating autonomously, charging in charging stations, parking in dedicated parking centers, and, importantly, linking in with existing modes of mass transit," he explained. "And what do we have on the horizon here? We have the M1 light rail system going up on Woodward Avenue. We have high-speed rail proposed to connect Detroit and Chicago. What if… we added infrastructure at the same time to test a program like EN-V?"

"If it's a success, you see it help to turn the city around," he said. "And if Detroit turns around, Michigan turns around. And if Michigan is healthy and robust, as we've seen time and again, it goes a long way toward improving economic conditions across America. And what if you have a pilot program to explore such a system here… what do you learn? You learn the viability and potential of such things as autonomous networked driving, vehicle to vehicle communications, integrated mobility solutions and multi-mode transportation, and, above all, consumer acceptance of these and many, many other concepts.

"In other words," he said, "you set the tone for the future of transportation in all the cities of the world. Again."

General Motors North America President Mark Reuss posed a lot of "what if" questions regarding the future of Detroit during his address to the Mackinac Policy Conference. In a vision for the future, Reuss asked how unprecedented cooperation among government and non-government entities could bring a rebirth to Detroit and make it a national leader. One possibility, he said, was a new view of transportation that would include GM's EN-V electric networked vehicle that was an award-winning attraction during the 2010 Shanghai World Expo. The EN-V is shown in front of the Detroit Institute of Arts.
Photo courtesy of General Motors

Story in Pictures

General Motors Arlington Assembly Plant employee Joe Gonzalez works on the line prior to GM\s announcement it will invest $331 million and add 110 jobs at the plant to to make future Chevrolet Tahoes, Suburbans, GMC Yukons and Cadillac Escalades.
Photo by Jim Cowsert courtesy of General Motors
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Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



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