GM auto plant may get new tenant

October 21, 2009

GM auto plant may get new tenant

Startup maker of hybrids to announce choice soon

By ANDREW EDER
The News Journal

A startup automaker plans to announce in the next few weeks which U.S. manufacturing site it will use to build a new plug-in hybrid family sedan.

Fisker Automotive confirmed Tuesday that it has talked with Delaware officials and toured the Boxwood Road assembly plant, idle since late July when General Motors closed the factory.

The company is developing a next-generation electric car under a program called Project Nina, which will be financed with a $359 million loan from the U.S. Department of Energy.

"We have looked at Wilmington," said Russell Datz, a spokesman for Irvine, Calif.-based Fisker. "There’s several plants that are available, and we’ve considered them all."

Datz said the company has selected its preferred location but does not have a formal deal in place.

He said Fisker would make an announcement "in the next couple of weeks."

The Boxwood Road plant has many of the attributes that Fisker officials say they are seeking.

The plant built the Pontiac Solstice and Saturn Sky roadsters and is designed for low-volume, niche production. Although the factory is 62 years old, GM invested $50 million earlier this decade to convert its body shop and assembly line to the Kappa platform.

The Boxwood Road plant had a maximum capacity of about 250,000 vehicles a year but was producing far fewer in the years before its closing. Fisker Automotive has said it plans to build 75,000 to 100,000 vehicles a year under Project Nina.

The company has also said it plans to export half its vehicles, so the proximity to the Port of Wilmington could be an advantage. And Fisker would have a ready pool of skilled auto workers to choose from in and around Delaware.

Henrik Fisker, the company’s co-founder and chief executive, spoke at a conference Tuesday in Washington where he revealed that the company has selected a manufacturing site. In an interview with the Associated Press, Fisker appeared to rule out New United Motor Manufacturing Inc., or NUMMI, in Fremont, Calif., where Toyota plans to halt production in March 2010.

NUMMI "is obviously way too big for us when you’re talking about 100,000 to 150,000 cars. So there are some plants out there that are simply too big," Fisker said.

"We found one that was very modern and has produced cars until recently and all that, so there is definitely a good choice of factories and all the Big Three are selling factories at this point in time," Fisker said. "We’re probably somewhat lucky … that there are so many empty factories available."

Motors Liquidation Co., the firm disposing of GM’s unwanted assets in bankruptcy court, would not comment on the Fisker announcement. Neither would the administration of Gov. Jack Markell, which has been working to lure an automaker to Delaware following the closing of the two assembly plants in the state in less than a year.

At Markell’s request, Motors Liquidation has left the Boxwood Road plant’s equipment largely intact to make the factory more attractive to potential tenants. Representatives of automaker Tata Motors, of India, and Penske Automotive Group, which planned to buy the Saturn brand before the deal fell through, also have toured the plant in recent months.

"It’s not our policy to comment on specific economic development initiatives," said Brian Selander, a spokesman for Markell. "We believe the Boxwood plant has an excellent story to tell, and we’re excited that so many people are interested in hearing it."

Markell’s administration has emphasized "green" jobs as a way to grow Delaware’s economy, and attracting Fisker to the state could also help repair its battered manufacturing sector.

Sam Lathem, president of the state AFL-CIO, a federation of unions that includes the United Auto Workers, said he has heard rumors that an automaker is coming to the Boxwood Road plant. On Tuesday, Lathem said he received a call from Alan Levin, director of the Delaware Economic Development Office, asking to meet later this week.

"This has been going around for a while," Lathem said. "I’m hoping something’s going to come through."

During an auto industry career that began in 1980, Henrik Fisker helped design the BMW Z8 roadster and the Aston Martin V8 Vantage. He and co-founder Bernhard Koehler launched Fisker Automotive in September 2007 in partnership with Quantum Technologies, a developer of alternative vehicle technologies.

The company has received financial backing from venture capital firm Kleiner Perkins Caufield & Byers, which counts former Vice President Al Gore as a partner. Fisker is also backed by venture fund Palo Alto Investors and the Qatar Investment Authority.

In September, Fisker Automotive was awarded a $528 million loan from the U.S. Department of Energy, part of a $25-billion program to fund the development of alternative vehicle technologies. Fisker’s technology uses a rechargeable lithium-ion battery to power an electric motor, complemented by a gasoline engine that turns a generator and charges the battery.

About $169 million of the loan was designated for engineering work for the Karma, Fisker’s first vehicle, a luxury sedan with a starting price of $87,900. The car, which Fisker says can achieve an average fuel economy of 100 miles per gallon, is made in Finland by contract manufacturer Valmet Automotive.

The remainder of the loan — about $359 million — is designated for Project Nina. The company expects the plug-in hybrid sedan to sell for $39,900 after federal tax credits.

At Tuesday’s conference, Fisker said the company hopes to achieve 3 percent of the U.S. luxury market by 2011. Project Nina is expected to reach showrooms by 2012 and Fisker said a lower-cost, high-volume plug-in could follow.

According to Fisker’s loan agreement with the Energy Department, the company estimates its costs for revamping an assembly plant will be no more than $449 million, assuming an acquisition cost of $42 million. The company must acquire a site, conduct an environmental assessment and have permits in place before receiving its initial advance for the Project Nina loan.

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