GM offered $2.6M tax break to stay at RenCen

November 18, 2009

GM offered $2.6M tax break to stay at RenCen

State package of tax breaks to help car firms create jobs

The Detroit News

The state Tuesday approved additional tax incentives to ensure General Motors Co. keeps its headquarters in Detroit and help several companies create jobs in a state stung by manufacturing cuts.

In a flurry of moves, the Michigan Economic Growth Authority awarded tax credits worth $85.8 million to five auto companies that plan to invest more than $700 million, create 554 direct jobs and retain 2,400 people.

The moves were the latest push by state officials to retain or create auto manufacturing jobs in a state that lost 309,000 between September 2008 and September 2009 and endured the brunt of GM and Chrysler’s bankruptcies last summer.

Separately, Gov. Jennifer Granholm dangled a $4.6 million state tax credit in hopes of convincing Chrysler Group LLC to build a small engine for Fiat SpA at a plant in Dundee.

"We’re beginning to see a genuine resurgence in the auto industry," said Greg Main, CEO of the Michigan Economic Development Corp. "These are solid investments being made because companies believe there’s an opportunity to serve a market" that has been struggling, he said.

The most high-profile project addressed by the MEGA board Tuesday involved additional tax incentives to help GM maintain its world headquarters at the Renaissance Center.

The MEGA board Tuesday approved extending a tax credit to GM for 2,500 employees at the RenCen. There are about 4,000 workers there now but GM is reshuffling workers under a broad facilities review and it is unclear how many workers would remain in Detroit. The tax break would be worth $2.6 million annually if GM keeps 2,500 employees at the RenCen.

Gov. Jennifer Granholm said it was "incredibly important" from an economic and symbolic standpoint that GM keep its world headquarters at the RenCen.

"It’s a symbol. For (GM) to abandon Detroit would send a terrible message," she said. "We hope as many employees as possible stay at the Renaissance Center."

The credit would expand a previous round of incentives issued by the MEGA board in June that convinced GM to build a new small car at its Orion Township assembly plant and invest up to $700 million. At the time, the board also approved a broad retention employment tax credit for 20 years for up to 20,000 retained employees at GM manufacturing facilities statewide.

Under the proposal discussed Tuesday, the MEGA board would expand the tax credit to 22,500 employees. The board said it planned to reach a final agreement with GM on the new tax incentives by Dec. 18.

"GM remains committed to maintaining the Renaissance Center as its global headquarters, and we continue to work closely with the state and the city to retain our presence in Detroit," GM spokesman Greg Martin said.

The Detroit News reported last month that GM had launched a formal review of its facilities in southeast Michigan as it considered moving some operations out of the Renaissance Center and consolidating workers spread among facilities in Pontiac, Warren and Grand Blanc.

GM is considering basing auto-related functions at its tech center in Warren, already home to product engineering, global purchasing and design.

Chrysler, meanwhile, would receive a tax credit for up to 10 years if it decides to invest $179 million at its Global Engine Manufacturing Alliance LLC (GEMA) plant. The investment could create 155 Chrysler jobs and another 418 spinoff jobs to produce as many as 250,000 engines annually, as well as the production of engine block, head and crank components.

Chrysler spokesman Max Gates said he did not know when Chrysler would make a final decision on where to build the Fiat engine. The automaker also is considering a plant in Saltillo, Mexico."> (313) 222-2028

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