Michigan GM Plant Wins Small-Car Face Off

Orion Township beats plants in Wisconsin and Tennessee.

by on Jun.26, 2009

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Orion will not only build a tiny subcompact car, but also will be equipped to build larger models.

The state of Michigan has won out over Tennessee and Wisconsin in a battle over when GM will build a new small car. As many as 1,400 jobs were at stake.

The General Motors  plant in Orion Township beat out GM plants in Wisconsin and Tennessee where the old Saturn plant in Spring Hill, Tennessee now appears headed for sale with the assets of the old GM that will linger on in a bankruptcy liquidation after the ‘new” GM emerges.

A consultant familiar with the competition between the three states said officials from Wisconsin had offered $70 million in tax credits. It appears Michigan’s offer was larger and “that might tip the scales,” the consultant said privately. Michigan has not released details of Michigan’s offer, pending GM’s announcement.

GM CEO Fritz Henderson had said last week the decision would be reviewed by the Obama administration. Secretary of Commerce Gary Locke  said during a visit to a solar panel plant in Auburn Hills, Michigan this week that the administration plans to do all it can to help the economy in Michigan where unemployment is at record levels with no improvement in sight. GM had announced plants to close seven plants across the state as part of bankruptcy-driven restructuring, including Orion.

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Henderson said last week the chosen plant would be re-equipped not only to build a new small subcompact GM was planning to import from China, but another vehicle as well, starting in late 2011 or early 2012. The new plant will not only build a small subcompact car, but also will be equipped to build other models, he said. A nearby stamping plant is also expected to remain open as part of the deal.

The fact GM spent $600 million re-tooling the Spring Hill plant just last year was thought to have given the Spring Hill plant something of an edge in the competition.

Since Tennessee lost the competition, the state’s political establishment, headed by Senator Corker, is certain to argue that the state is being punished for opposing GM’s original request for government aid back in December.

Nissan, headquartered in Tennessee did receive a fat subsidy last week courtesy of U.S. taxpayers when the Department of Energy granted it $1.6 billion to produce electric cars and battery packs at its manufacturing complex in Smyrna, Tennessee.

The Janesville plant, on which Wisconsin officials were counting, was nearly 100 years old and Henderson had expressly ruled out building any kind of new plant.

Orion, however, has its own energy source from a nearby landfill and reputation for building quality vehicles, having scored well on the J.D. Power initial quality survey released earlier this week, GM insiders noted.

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