Suppliers and workers at General Motors’ assembly plant in Spring Hill, Tenn., thought they had the inside track this summer when GM had to decide quickly where to build a new family of subcompact cars.
The plant boasts a recent renovation, a history of good labor relations and the sort of innovative supplier-automaker partnership that automakers profess to seek.
It wasn’t enough. A plant in Orion Township, Mich., got the nod.
"A lot of us are still wondering how they made this decision," says Mike Herron, chairman of Spring Hill’s UAW Local 1853. "Obviously, we’re all hoping the best for Orion. But when you consider what we’ve achieved here, you have to wonder what it counted for."
A look at how the plants stacked up, and why the Michigan plant won the new business, shows why suppliers and union leaders often remain skeptical about cooperating with carmakers.
|Factory vs. factory
In June, GM’s Orion Township, Mich., plant beat out Spring Hill, Tenn., as the site for a new small-car program. A third plant in Janesville, Wis., was widely considered a long shot.
ORION TOWNSHIP, MICH.
Assembly plant work force: 1,400
Current products: Pontiac G6, Chevrolet Malibu
Last plant update: 2003-04
SPRING HILL, TENN.
Assembly plant work force: 2,500
Current product: Chevrolet Traverse
Last plant update: 2007-08
$700 million — twice
In 2007, a $700 million renovation had turned Spring Hill into GM’s most agile plant, where reprogrammable welding lines, paint booths and vehicle carriers were capable of building anything from a small car to a Chevrolet Tahoe SUV.
How long would it have taken Spring Hill to convert its production lines to the new family of small cars? "A matter of weeks," Herron estimates. "That was the point of our renovation — to be able to respond to market chang-es without a lot of new investment."
Orion Township, a 26-year-old plant, now will undergo its own $700 million makeover. The investment will bring Orion up to Spring Hill’s level of flexibility in its body shop and paint operations by 2011.
The transformation also will require Orion to embrace "Value Added Assembly," a new GM practice that debuted at Spring Hill in 2008. The practice uses lower-paid employees of third-party companies to work inside the GM plant, assembling parts side by side with GM workers.
At Spring Hill, several hundred workers from Penske Logistics and Premier Manufacturing Support Services intermingle on the assembly lines and work the same shifts as their vehicle assembly brethren. But while the GM employees earn normal UAW hourly rates of about $28, the parts workers earn $12 to $14 an hour.
Premier workers, who previously cleaned out paint booths, unloaded trucks and maintained the plant grounds, now assemble headliners and door modules. Penske workers perform parts sequencing inside the GM plant and deliver parts to the line. The practice helped make the Chevy Traverse a profitable product.
Nissan North America and Toyota Motor Engineering and Manufacturing North America have adopted similar practices inside some of their U.S plants. But it remains a radical departure for GM and the UAW.
GM spokeswoman Sherrie Chil-d-ers Arb declined to say what criteria the automaker used in selecting Orion for the new small cars, which originally had been slated for a Korean assembly plant. She rejected press speculation that GM had selected Orion in response to political pressures to tackle Michigan’s high unemployment.
GM received various state tax abatements, training funds and other public incentives totaling nearly $1 billion to renovate Orion. Arb declined to put a dollar figure on the incentives package.
Ron Harbour, a consultant with the international firm Oliver Wyman who has measured automaker efficiency factory by factory for two decades, believes GM considered factors beyond manufacturing flexibility in selecting Orion — possibly including politics. Bob Corker, a Republican U.S. Senator from Tennessee, had been part of the contingent of politicians who argued late last year in favor of allowing GM to fail without federal money. He later publicly called for GM to give the new program to Spring Hill.
"Orion has never been one of GM’s shining stars," Harbour says. "It received some degree of flexibility earlier in this decade when it began building the Pontiac G6. And its quality has been pretty good, although not GM’s best. But when it comes down to a decision like this, you weigh a lot of different factors, and it’s obvious that GM did," he says. "Just because a plant is flexible and efficient —even if it’s your best-performing plant — doesn’t mean it’s a given for getting the next product."
Spring Hill will stop building Traverses in November, leaving only a separate engine plant and a parts distribution center operating at Spring Hill.
Herron is hopeful there will be still another product that comes Spring Hill’s way and that its downtime will not last long. "We still have a role to play as a flex plant," he says. "As the market comes back, we can build anything we’re asked."