Key drivers of GM’s future: Investments show firm’s confidence in Toledo, area

Article published May 02, 2010

Key drivers of GM’s future: Investments show firm’s confidence in Toledo, area

At the Defiance plant, which makes castings for engines, Bryan Paulson places newly coated forms onto a drying rack.

A YEAR AGO, workers in General Motors Co. plants in Toledo and Defiance weren’t sure they were going to have jobs the following week, let alone in a year.

But thanks to a powerful scrubbing of the company in bankruptcy, a lot of grease from the government, and a faltering Toyota Motor Corp., local GM workers have renewed confidence about the future of their jobs and their industry.

And as is expected to be the case for rival Chrysler Group LLC, much of GM’s future will depend on people in northwest Ohio and the products they make.

GM’s Defiance Foundry has received more than $170 million in investments from the automaker in the last three months, and the award-winning Toledo Powertrain plant is about to become the company’s only North American source of a new transmission that will go into GM’s new smaller cars.

Defiance employee Pearl Reyna inserts halves of foam engine-casting forms into a machine that glues them together.

Within the next two months, Toledo Powertrain will begin building a six-speed front-wheel-drive automatic transmission that will be used in as many as seven brand-new or redesigned vehicles, including the new Chevrolet Cruze.

The new line — and the expected 600 jobs that will go with it — complements one that now builds fuel-efficient six-speed rear-wheel-drive transmissions for high-volume vehicles including the Chevy Silverado pickup and Chevy Tahoe sport utililty vehicle.

And it means that the Toledo plant, as well as the Defiance Foundry, will manufacture critical components for high-volume GM vehicles of all sizes, providing job security more than any single product could.

“It’s a big deal,” said Paul Lacy, an auto analyst with IHS Global Insight in suburban Detroit. “All of the new [small vehicle] programs that GM has coming out will get transmissions from Toledo.”

When the 430,000-square-foot front-wheel-drive line starts up in June, it will make the transmissions for the popular Chevrolet Malibu sedan. By September, it will begin supplying the assembly plant in Lordstown, Ohio, with transmissions for the Cruze, the replacement for the Chevrolet Cobalt.

Toledo Powertrain employee Mike Saylor runs tests to prepare for production of a new front-wheel-drive transmission.

Soon thereafter, it will supply the gearbox for the Chevy Aveo, Spark, and Equinox, as well as for other small vehicles when production reaches its peak of 2,200 front-drive transmissions a day on three eight-hour shifts.

Mr. Lacy said the announcements in the last three months involving Defiance — $59 million to cast parts for the new four-cylinder Ecotec engine and Tuesday’s $115 million for a next-generation small-block V8 — place the city at the crossroads of GM’s future products.

“The Ecotec is basically the blanket for most of [GM’s future small car] program. It’s a massive program, not to mention all the bigger vehicles that will eventually get transitioned from V6 to four-cylinder engines,” Mr. Lacy explained. “Whoever’s working on those programs will be well positioned for at least the midterm.”

For longtime employees like Bill Romes, who works the third shift at the Defi ance Foundry, GM’s assignment of high-volume products to local factories means something more than money — it means security. “This place will be here for me to walk out of. I’d like to make sure there’s a place to walk out of for the guys behind me,” Mr. Romes said last week.

Tomorrow, 55 idled employees will return to the Toledo plant, and 53 others will join them a week later. Those two groups followed 96 who returned over the past two weeks.

After a week of training, 104 of the recently returning employees will be assigned to the current rear-wheel-drive line, and 100 will start ramping up the upcoming front-wheel-drive line, plant officials said. All remaining laid-off employees are expected to return by the end of the year, which could result in the first off-the-street hiring the Toledo plant has had in years.

“It’s a great position to be in from where we were last summer,” said Steve Bishop, the GM engineer charged with overseeing construction of the new front-wheeldrive line. He was referring to the month-long bankruptcy from which the automaker emerged last July, when the very existence of what was once the world’s largest automaker was in peril.

About 132 Toledo employees either are still laid off or are temporarily assigned to other GM plants, plant spokesman Wanda Wellman-Montion said. Today, the Toledo plant has 1,095 active employees.

Forty-four hourly employees remain to be called back in Defiance, where 1,133 currently are on the job, plant offi cials said.

So why do operations in northwest Ohio seem to be restoring production more rapidly than other GM plants? Much has to do with the products they build and the people who build them, company officials and outside experts say.

Toledo Powertrain has been named the most productive transmission plant in North America four of the last six years by Oliver Wyman’s Harbour Report, a widely respected annual industry study of manufacturing operations.

“Toledo’s a no-brainer for GM,” said Ron Harbour, originator of the annual Harbour Report and a respected industry analyst who specializes in productivity issues.

“It’s a good plant in a good location. And to Toledo’s credit, they’ve never had a culture where things were good enough. They’re always trying to improve.”

Mr. Harbour said that no auto plant is truly safe from closing in a globally competitive marketplace, but said both the Toledo and Defiance plants had made themselves attractive to GM because of their productivity.

But Toledo also benefi ted from GM’s decision to shutter transmission plants in Ypsilanti, Mich., and Windsor, Ont.

“The decisions to wind down Willow Run and Windsor were incredibly diffi cult decisions, necessitated by an unprecedented economic downturn,” said Arvin Jones, GM’s manufacturing manager.

“Toledo has a long history of achieving their safety, quality, and cost objectives, and continuing to deliver business results is essential in today’s business environment.”

Mr. Jones also cited labor-management cooperation in both Toledo and Defi ance as
key elements.

“GM has recognized both of these plants for the quality of work they produce, and they’ve said they’re going to invest where they get the most return,” said Ken Lortz, Ohio regional director for the United Auto Workers.

“I think [GM’s] actions speak for themselves. They’ve got a great work force at both plants and great union leadership, and GM is making a pretty signifi cant investment in these folks.”

Tom Gallagher, Defiance plant manager, said the products coming out of its foundry aren’t necessarily the most important things to the future the plant.

“Manufacturing really is a people business. It’s not about the facilities and the equipment.

It’s about the people that have the vision and the abilities to perform the work every day to meet our customers’ requirements,” Mr. Gallagher said.

Said Paul Murcko, the GM chairman for UAW Local 211, representing workers in Defiance, “We want [GM] to want us to be the place to put their castings.

We’ve got great people here in Defiance, and we’re extremely happy that they’re putting the work here in Defiance, and we’re going to continue to do what we need to do to make us competitive.”

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