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GM may move some staff out of RenCen

October 3, 2009

GM may move some staff out of RenCen

Detroit to remain world headquarters, house senior execs

The Detroit News

General Motors Co. has launched a formal review of its facilities in southeast Michigan as it considers moving some operations out of the Renaissance Center in downtown Detroit and consolidating workers spread among facilities in Pontiac, Warren and Grand Blanc, The Detroit News has learned.

GM emphasized in a statement that the RenCen will remain the automaker’s world headquarters, housing President and CEO Fritz Henderson, other senior executives and space for board of directors meetings.

About 5,000 GM and GMAC Financial Services employees work at the complex, down from more than 7,000 a few years ago.

Office space at the RenCen is about 67 percent occupied while commercial areas including restaurants, the hotel and movie theater are about 90 percent full. In Warren, GM’s Technical Center has more than 10,000 employees, but capacity for twice as many. GM has about 800 workers in Grand Blanc and excess space.

Consolidating offices would encourage collaboration, improve efficiency, spare GM workers from shuttling among offices spread across southeastern Michigan and speed decision-making, an essential part of transforming the automaker’s culture.

"We are beginning a formal review of our facility utilization in southeast Michigan," GM spokesman Dan Flores said Friday. "Until that review has been completed and any impacted communities and employees have been notified, rumors about potential moves are just speculation. It is our policy to communicate details of any moves to employees first."

The RenCen is a set of seven interconnected towers that sits on the Detroit riverfront and anchors downtown. GM workers are mostly located in towers 100 and 300, but once the review is completed, there may be as little as one tower occupied by the automaker, sources said Friday.

"We recently became aware of GM’s intent to relocate some of its non-headquarter employees," said Edward Cardenas, spokesman for Detroit Mayor Dave Bing. "Like the city of Detroit, they continue to restructure to help ensure their stability and sustainability. We can’t argue with that."

GM is considering basing auto-related functions at its tech center in Warren, already home to product engineering, global purchasing and design, according to one source. GM could possibly move a variety of operations to Warren from the RenCen, such as sales and marketing and OnStar, along with its service parts and operations world headquarters, now in Grand Blanc. GM also could relocate some operations from Pontiac.

No decisions have yet been made, the source said.

The facilities review likely will not include GM’s Milford Proving Ground.

The formal review comes amid a high-stakes recruiting game pitting Detroit and Wayne County against the city of Warren, which is wooing GM to relocate as many workers as possible to the tech center.

In April and May, GM seriously considered moving out of the Renaissance Center as part of its bankruptcy — with extensive planning for such a move.

President Barack Obama on April 30 told Michigan members of Congress during a phone call from the Oval Office that GM had decided to remain in Detroit for "business reasons."

GM and the White House auto task force came under heavy political pressure from Michigan officials, who had strongly opposed the move.

The facilities review could have disastrous effects for local communities where GM pays taxes, particularly in Detroit and Wayne County, where politicians are studying whether to designate the RenCen a "Renaissance Zone," the most generous tax abatement available in the state. Tax breaks would counter the absence of an income tax in Warren.

Wayne County Executive Robert Ficano was unaware of GM’s facilities review.

"The (Renaissance Zone) is still on the table," Ficano said in a statement. "We have continually made ourselves available for negotiations. We want to do what we can to keep GM in Detroit."

Flores would not say how long the review could take but Henderson and Chairman Ed Whitacre Jr. have stressed the importance of making quick decisions after GM emerged from bankruptcy in July armed with $50 billion in federal aid.

The review comes after GM has shed thousands of white-collar workers and executives who accepted early retirement and buyout offers. The most recent wave of workers was to have left by Thursday. GM started the year with 29,650 salaried employees and wants to have 23,500 at the end of 2009.

The departing workers have left vacancies in the RenCen and Warren.

Moving more workers out of the RenCen could make it even more challenging for GM, which owns the facility, to find tenants amid a depressed commercial office market in downtown Detroit.

Thirteen years ago, GM paid $75 million for the RenCen. The automaker later borrowed $500 million against it for a major remodeling and leased it back until May 2008, when it paid $626 million to take full ownership of the complex.

Last fall, GM tried to sell the RenCen again to raise funds and lease back office space, but a Detroit pension fund balked at a loan request and other funding was not available.

Detroit collects more than $6 million in taxes from GM and losing part of that revenue would compound problems for a city facing a $300 million deficit.

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