UAW and GM must resolve fate of idled Janesville plant – Detroit Free Press
General Motors’ assembly plant in Janesville, Wis., shuttered for more than six years, will most likely be sold unless the UAW and company can come up with a longshot business case for reopening it.
GM closed the plant in December 2008 as it prepared to seek a government bailout. Demand for the Chevrolet Tahoes, Suburbans and GMC Yukons fell sharply. Parts of the plant dated back to the 1920s. It was a likely candidate to be mothballed.
“It’s a deteriorating old building with a very leaky roof,” said John Beckord, president of Forward Janesville, an economic development group.
But as the automaker went through bankruptcy in mid-2009, Janesville assembly was not included in the RACER Trust into which GM placed unwanted assets to be sold or redeveloped. That means it remains part of General Motors Co., or “new GM” and remains an asset for accounting purposes.
“It’s among the topics that will be discussed as part of the negotiations,” said GM spokesman Bill Grotz. “Future market conditions and the UAW-GM agreement will determine what we decide about the Janesville plant’s future.”
A UAW spokesman declined to comment.
In Janesville, few have raised their hopes that the 4-million-square-foot plant might reopen.
“I have friends in the UAW who say it is possible,” said Beckord. “Most of us think it is more likely there will be an agreement that enables GM to dispose of the property. That’s not necessarily the outcome we desire, but we have to be realistic.”
It sits in the Congressional district of Rep. Paul Ryan, the conservative Republican who was Mitt Romney’s vice presidential running mate on the 2012 GOP ticket.
Manufacturing began in 1919 at the site when the Samson Tractor Co., a division of a young General Motors, merged with Janesville Machine Co. GM converted it to produce Chevrolets in 1923. But about half the factory has been updated since 1975, Beckord said. It once employed about 7,000 workers in 1970, but the workforce had shrunk to about 1,200 when it closed at the end of 2008.
Here’s why there’s a glimmer of hope for its revival.
With Americans buying new vehicles at an annual rate of more than 17 million, the strongest in more than a decade, plants that make pickup trucks, SUVs and crossovers are running flat out.
In the second quarter of this year, GM’s capacity utilization for all its North American plants was 110%, according to a filing with the Securities and Exchange Commission.
That’s good up to a point because it means the company is straining to keep up with demand. But running above 100% for an extended time puts stress on equipment and workers.
If the company bets that U.S. sales will remain at or above 17 million for the next three or four years, and if the UAW would agree to let GM hire new workers who start at a lower wage, there could be a case for reopening.
Even then the cost of equipping an older factory for modern manufacturing processes could prove prohibitive.
In 2012 when he was running for vice president, Ryan cited the Janesville plant as a failure of the Obama administration’s attempt to rescue auto manufacturing jobs. The unemployment rate in the city of 63,000 southeast of Madison and just north of the Illinois line was 9% and the pain of the plant’s closing was still fresh.
Today the area’s jobless rate has dropped to 5%. Beckord said he anticipates an announcement later this week of a new distribution center in town that could employ more than 500 people.
“The problem today is finding enough workers,” he said. “All those supplier plants and sequencing operations that used to support GM have all been bought and re-used.”
Contact Greg Gardner: 313-222-8762 or firstname.lastname@example.org. Follow him on Twitter @GregGardner12.