GM to pump $120M into local factory

April 21, 2010

GM to pump $120M into local factory

Detroit-Hamtramck plant to build Malibu, along with Volt

Detroit News Washington Bureau

General Motors Co. will announce today that it will invest about $120 million in its Detroit-Hamtramck plant, where the automaker will assemble the 2012 Chevrolet Malibu.

The additional investment will bring to nearly $500 million the amount that GM has committed to the factory, known locally as the Poletown plant.

In a separate major milestone, The Detroit News learned from two people with direct knowledge of the payment that GM wired $5.4 billion to the Treasury Department on Tuesday afternoon — repaying its outstanding government loans and $700 million in interest. GM also repaid the Canadian and Ontario governments for its remaining $1.1 billion loan, plus unspecified interest.

GM is tapping unused government bailout funds held in escrow to repay the taxpayers.

GM announced in December that it would spend $336 million upgrading Poletown to produce the extended-range electric Chevrolet Volt, which will go on sale this fall. The first pre-production Volt rolled down the assembly line last month.

The $120 million Poletown investment that GM Chairman and CEO Ed Whitacre Jr. will announce today will enable the automaker to begin assembling its popular Malibu there, in addition to the Volt and some other models.

GM spokesman Greg Martin declined to comment Tuesday, and the Treasury Department didn’t return messages.

Whitacre will be in Kansas today to herald the loan payoffs and announce an additional investment of more than $130 million in GM’s Fairfax Assembly Plant, outside Kansas City, Kan.

The Kansas investment will enable GM to further expand Malibu production capability at the Fairfax plant. Until November, the Malibu also was produced in Orion Township, but that plant is being retooled to build a next-generation small car.

"Nobody was happy that GM needed government loans — not the governments, not the taxpayers and, quite frankly, not the company," Whitacre wrote in a Wall Street Journal opinion piece on the paper’s website Tuesday night. The repayment "is a sign that our plan for building a new GM is working," he said.

Whitacre to make Hill visits

The News reported in December that GM planned to assemble the Malibu at the Detroit-Hamtramck plant, but the automaker declined at the time to confirm the report.

After his appearance in Kansas today, Whitacre will fly to Washington to meet with Michigan’s congressional delegation, and separately with Speaker Nancy Pelosi. It is his first trip to Capitol Hill since taking the helm at GM in December.

GM, which has said it may make a profit this year, wants to convince Americans turned off by the government’s $50 billion bailout to give it a chance. The automaker is working to position itself for an initial public stock offering — likely next year.

Before Tuesday, GM had repaid $2 billion of its Treasury loans and $400 million to the Canadian and Ontario governments. The Treasury Department swapped about $42 billion of its loans for a 61 percent majority stake in GM.

Taxpayers won’t know whether they will get fully repaid until the government sells off its shares — a process that will take several years.

Plants adding flexibility

Michael Robinet, an auto analyst at CSM, said GM will be looking to make its facilities flexible. By building the Malibu at two plants, "you can adjust volume of the (Buick) Lacrosse and Volt as needed."

"The days of the one-horse, one-product plants are gone," he said. "This gives GM flexibility to react quickly to market movements and keep capacity utilization high."

The Volt announcement boosted GM’s total investment in the extended-range electric car to $700 million in Michigan.

It was not known Tuesday how many workers might be added in Michigan to build the Malibu. The Poletown plant employs 913 hourly and 135 salaried workers, according to a GM website.

The 3.6 million-square-foot plant, built for $500 million on 362 acres in 1985, has assembled the Cadillac DTS and Buick Lucerne since 2006. The facility is GM’s only Detroit plant, and the property is home to Hamtramck’s only cemetery, dating to 1863.

The Malibu decision is a major production move for one of GM’s best-selling cars and a coup for Michigan, which has given the automaker incentives worth several hundred million dollars to assemble vehicles in a state devastated by manufacturing job losses.

Michigan has 456,000 manufacturing jobs, down from nearly 900,000 in 2000.

The announcement gives the Detroit-Hamtramck plant a bright future — producing two key vehicles.

GM plans to produce about 8,000 Volts for the 2011 model year before eventually expanding to as many as 60,000.

Early run tests capabilities

Poletown operates on one shift with production of 354 products per day, on a four-day-a-week, 10-hour-per-day schedule.

The early run of vehicles that started last month is intended to "to ferret out any areas that are difficult to assemble," GM Vice Chairman Bob Lutz told the News last month.

"This is eight months before production launch," Lutz said. "It shows that the program is in extremely good shape."

GM will build several hundred of these vehicles over the next few months before the Volt’s official launch. GM plans to build about 4,000 Volts, which will get up to 40 miles of all-electric range, through the summer of 2011.

The Detroit-Hamtramck plant also builds some specialty vehicles, including limousines — standard and official; President Barack Obama was the recipient of the most recent Presidential Cadillac limousine in January.

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