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Willow Run plant to be taken over by new GM

June 28, 2009

Willow Run plant to be taken over by new GM

Firm will be liable for future lawsuits

BY JUSTIN HYDE
FREE PRESS WASHINGTON STAFF

WASHINGTON — General Motors Corp. has moved its Willow Run transmission plant off the list of plants that will be shuttered and sold, and will accept responsibility for future lawsuits stemming from alleged defects in its vehicles on the road today.

U.S. Rep. John Dingell, D-Mich., as well as officials in Wayne and Washtenaw counties, had been pushing GM hard to reconsider its decision to close Willow Run. The counties had said they were willing to consider fresh incentives to keep the plant running, while also filing objections in court saying the move shifts U.S. jobs to Mexico and France.

Under the amended sale plan GM filed Saturday, the new GM would take the lease through December 2010 on the portion of the Willow Run plant that builds six-speed transmissions. That part of the plant employs about 250 workers.

Only GM plants that are staying open or deemed "idle," such as assembly plants in Spring Hill, Tenn., and Janesville, Wis., are being moved to the new GM. The plants being closed will be kept among the remaining assets and liquidated.

Representatives for GM could not immediately explain the change Saturday.

County officials had told the U.S. Bankruptcy Court in New York that it would cost GM $27 million more to build six-speed transmissions in Toledo, and that some of the work would be shifted to foreign plants.

GM had defended the closing, saying the reduced demand for trucks and large SUVs made it necessary to consolidate the building of six-speed transmissions for rear-wheel drive vehicles in one plant. The company did not address the claim about foreign production; GM’s plant in Silao, Mexico, builds the same transmission.

GM’s shift on product liability comes after the company was facing growing pressure from safety advocates, state attorneys general and some members of Congress over its attempt to shunt all product liability claims to the "old" parts of GM left in bankruptcy.

Chrysler LLC was successfully able to win such protection as part of its bankruptcy sale to a partnership with Fiat SpA.

GM’s amended plan would have the new GM liable for product liability lawsuits stemming from vehicles on the road as long as the incident takes place after the new GM emerges from bankruptcy. The company did not change its plan to leave existing lawsuits behind.

Lawyers for people with pending lawsuits against GM have said the move would put about 300 people in a legal dead-end, suing the shell of a company that will lack assets to pay judgments.

The Official Committee of Unsecured Creditors, whose 15 members include bondholders, GM suppliers and the UAW, had said that GM’s plan violates bankruptcy law by attempting to free GM from an estimated $2.2 billion in liabilities, including vehicle defects, employee and asbestos-related claims.

The move would bar cases such as the ones GM settled in 2007 that claimed it sold 35 million vehicles with faulty coolant and engine parts. GM agreed to pay up to $800 each to vehicle owners in that deal. GM Chief Executive Officer Fritz Henderson said earlier this month that GM had no plans to accept product liabilities; it already had agreed to honor warranties and any safety recalls on older models.

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