Chattanooga: Idling GM jobs may offset VW

Chattanooga: Idling GM jobs may offset VW

June 2nd, 2009 in News

The closing of General Motors' former Saturn plant in Spring Hill, Tenn., ultimately could cost Tennessee up to 15,000 jobs and offset the employment gains the Volunteer State expected to garner from Volkswagen, a state economist said Monday.

"If the Spring Hill plant were to completely close, the job losses from the assembly plant and all its suppliers would pretty much make it a wash with the new Volkswagen plant coming to Chattanooga," University of Tennessee economist Matt Murray said.

But Tennessee officials pledged Monday to try to keep the Middle Tennessee GM facility viable and operating. In fact, officials urged GM to invest more in the Spring Hill facility to make it the assembly plant for a new GM line of subcompacts.

"It's certainly a sad day for many workers who are losing their jobs, but it could have been a lot worse," said U.S. Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee who spent most of the weekend talking with GM, UAW, White House and state officials. "We know that Tennessee is a great place to make automobiles and the Spring Hill facility is a well-equipped facility for future production."

An aerial shot of the GM plant in context to the surrounding area in Spring Hill, Tenn., Thursday, May 28, 2009. (JAE S. LEE / THE TENNESSEAN)

An aerial shot of the GM plant in...

General Motors said Monday it plans to idle production by December at its Spring Hill assembly plant where the company launched its Saturn brand two decades ago. GM is shedding Saturn and four other brands. The automaker will shift production of the Chevrolet Traverse now done in Spring Hill to a plant near Lansing, Mich., as part of a cost-cutting plan developed in cooperation with the Obama White House.

But at least for now, GM is keeping 589 of its 2,447 jobs in Spring Hill. The Spring Hill facility also could be one considered for production of a new compact vehicle GM plans to build to help meet new federal fuel economy standards.

U.S. Sen. Lamar Alexander, R-Tenn., who helped recruit GM to build its Saturn plant in Spring Hill when he was governor in the 1980s, said he hopes the idling of the Spring Hill plant "will only be a short-term problem."

"For the longer term, there is no reason why the new GM cannot build cars and trucks at Spring Hill more competitively than at any other location in America," Sen. Alexander said. "Tennessee offers hundreds of suppliers, one of the country's best four-lane highway systems, a right-to-work law, thousands of trained workers and low taxes. The Saturn plant was said to be the largest U.S. capital investment in history, and since then, General Motors has spent hundreds of millions modernizing it."

GM invested $1 billion in the Spring Hill manufacturing facility to add new powertrain and engine facilities to support a new Saturn sports utility vehicle in 2000 and 2001. The company put another $690 million in two years ago to retool the plant to make Chevrolet Traverse vehicles.

But with GM vehicle sales down nearly half from what they were two years ago, the company is shuttering major assembly plants in Pontiac, Mich., and Wilmington, Del., and idling plants in Orion Township, Mich., and Spring Hill.

Workers for suppliers to the GM plant in Spring Hill are bracing for more layoffs when production of the Chevrolet Traverse crossover vehicle shifts to Michigan.

Dennis McGee, president of UAW 3031 at Penske Logistics, which employs 247 workers inside the GM plant in Spring Hill, told the Tennessean newspaper on Monday that workers "are not reacting well to it, but we're still holding out hope that something could be done."

Dr. Murray said auto assembly plants typically support five supplier jobs for every plant assembly job.

According to a 2008 study by IHS Global Research, Tennessee had the lowest share of job losses of any of the country's top automotive-producing states. Nonetheless, the number of Tennesseans employed in transportation equipment manufacturing is down nearly a third from the peak reached in 2005, according to the Bureau of Labor Statistics.

Two years ago, the Allied Signal Bendix brake plant - the only UAW-represented plant in Southeast Tennessee - shut down because of falling sales. TRW Automotive recently laid off 55 workers at its plant in WIlson County. On Monday, Peterbilt Motors Co. completed a 390-employee cutback in Nashville.

"With the sluggish economy, we're certainly expecting more job losses this year," Dr. Murray said.

By 2010, Tennessee's transportation equipment industry is projected to employ 23,800 fewer people than five years ago, including job losses from the automotive and boating industries, according to new projections from the UT Center for Business and Economic Research.

The U.S. government is investing another $30 billion in GM as part of its restructuring announced Monday. Sen. Corker said he had hoped to limit federal involvement in the company last December, when he tried unsuccessfully to negotiate concessions from bond holders, creditors and the UAW.

"There are legitimate taxpayer concerns, and the real underlying question is how involved this administration is going to be in running this company," Sen. Corker said, noting that the White House helped remove GM's former CEO and forced many dealers to close as part of its rescue package.

Ron Bloom, one of the leaders of the Presidential Task Force on the Auto Industry, said the government "didn't want to own any part of GM" and is eager to shed its stake in the company once the economy recovers.

"The government is the owner because it was the only (entity) that could put forth the capital to make this company healthy and, as a responsibility to the taxpayer, it has to demand something from this company for the taxpayer," he said.