GM To Build Engine Plant For Volt In Flint
A new General Motors Corp. engine plant to be built in Flint is good news for the struggling state of Michigan, which has seen massive job losses as the auto industry has contracted under a slumping economy and high gasoline prices.
But GM's top executive says the new four-cylinder engine factory, which will build powerplants for the new rechargeable electric Chevrolet Volt and a new high-mileage compact car, is also a commitment to investing in the United States.
"It's essential that GM respond proactively and aggressively to America's demand for new, more fuel-efficient vehicles, including those with four-cylinder engines," CEO Rick Wagoner said during a ceremony announcing GM's $370 million investment in the new factory.
He said the plant will allow GM to double its global production of smaller-displacement engines by 2011, with more than half the increase coming in North America.
The new plant will build a 1.4-liter four-cylinder engine that will extend the range of the Volt, and a turbocharged version that will power the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio.
"This will be one of the places. You will be one of the teams that help GM lead into our second century," Wagoner told workers and government officials gathered for the announcement.
Production at the new plant will begin in 2010, and both cars are slated to go on sale in the same year.
The location of the new factory was negotiated in last year's historic contract between the United Auto Workers and GM, UAW Vice President Cal Rapson said. It came in exchange for the union agreeing to a $14 per hour wage rate for some new hires, about half the rate of current workers, and the transfer of GM's massive retiree health care liability from GM to a union-administered trust fund, he said.
The contract, Rapson said, is helping GM get through some tough times, especially as pickup truck and sport utility vehicle sales continue to slump due to economic woes and $4 per gallon gasoline. GM's U.S. sales are down 18 percent so far this year.
"There's no question, especially with what's happened to gas. I'd hate to think where we would be had we not got that agreement," he said.
The local union for the new engine plant also agreed to a new flexible pact with GM that lets workers do multiple jobs, he said.
He said that while GM is committing to retain 300 jobs, there could be more.
"Depending on how well it goes, there can be up to 700 jobs," he said, adding that GM has made no guarantees.
Rapson said he's hopeful the new engine plant will spawn even more jobs in the Flint area with parts suppliers.
Workers from the nearby Flint Engine North plant that closed last month said the announcement is good news for an area hard hit by auto job losses. The new factory, several workers said, brings the prospect of more jobs for the industrial city about 50 miles northwest of Detroit.
"This also means that there's a future for our youth in this area," said Jean Adams-Anderson, a UAW representative at the Flint Engine North complex.
The state of Michigan on Tuesday approved $132.5 million in tax incentives for the automaker to spend $838 million on the new plant and to upgrade four other facilities, including the Detroit-Hamtramck assembly plant where the Volt will be built.
The Flint investment includes the 552,000-square-foot plant as well as machinery and other equipment. GM says it will invest $21 million in tooling for its suppliers to support the new Flint factory.
The factory, GM said, will have 300 flexible work stations that will allow the company to build different four-cylinder engines without retooling.
The new plant will help GM roll out new models designed to adjust to a shift in demand to smaller cars from trucks, which GM and other automakers say is permanent.
The struggling automaker has lost $57.5 billion in the past 18 months, including $15.5 billion in the second quarter. Its U.S. market share has fallen to about 23 percent this year from a peak of nearly 51 percent in 1962.
The company is banking on the Volt to be its car of the future, although it conceded this week that the Volt won't operate exactly as advertised.
GM initially said the Volt would be able to run 40 miles on its lithium-ion batteries, with a small internal combustion engine recharging the batteries to extend the range hundreds of miles. A top executive said the same thing as recently as last week.But company spokesman Rob Peterson said Wednesday that engineers changed the design so the Volt engine will power a generator that would run the electric motor after the batteries are depleted. A small amount of power from the generator will recharge the batteries, but most will be used to directly run the car, he said.
He said bypassing the batteries is more efficient, and GM did not intend to deceive people by maintaining that he motor would only be used to recharge the batteries.
"At the end of the day, to the consumer, the vehicle will operate much the same way," he said.
GM shares were down 29 cents, or 2.8 percent, to $10.06 in late afternoon trading.
Copyright 2008
Associated Press. All rights reserved.