Michigan: Another Economic Blow

June 5, 2009

Another economic blow

Willow Run plant’s imminent closure rocks Ypsilanti Township
Tuesday, June 02, 2009

The Ann Arbor News

Ypsilanti Township officials burned up the phone lines Monday, trying to find to find out why General Motors Corp. decided to close the Willow Run Powertrain transmission plant by the end of next year under the automaker’s bankruptcy reorganization plans.

The massive plant, which employed generations of families and has its roots as a storied factory of the B-24 bomber during World War II, is the township’s largest taxpayer.

GM announced Monday it would close Willow Run – along with 10 other assembly, Powertrain and stamping plants, and idle three others – as part of its effort to trim labor and production costs.

Although the future of the Willow Run plant has been uncertain for some time, township officials say they were shocked by GM’s decision. They say the plant produces six-speed transmissions more cheaply and efficiently than other GM plants.

Township officials appealed to Rep. John Dingell, D-Dearborn, and Gov. Jennifer Granholm to intervene. Dingell sent a letter to GM CEO Fritz Henderson, urging the plant be kept open and citing an internal company scorecard that gave it top marks for quality.

“Our initial goal is to try to get (GM) to reverse the terrible financial decision they’ve made to close the transmission plant,” township Supervisor Brenda Stumbo said.

Sprawling more than 5 million square feet on more than 300 acres of property, the Willow Run plant still employs about 1,364 hourly and salaried workers. That’s down from 14,000 during the late 1970s. As late as 2005, the plant employed 4,000 workers.

About 28 percent of the plant’s workers live in Washtenaw County, according to a Southeastern Michigan Council of Governments survey in 2000.

GM pays $5 million in taxes annually on the plant. Of that, the township receives $1.5 million.

Employees, who were gathered on the factory floor at 8:15 a.m. Monday to hear the company’s announcement, were also shocked the entire plant will be closing – although reports surfaced last week that it was a possibility. More than half of the employees aren’t working right now under a previously announced temporary idling of some transmission lines.

“You could hear a pin drop in a room with 400 people,” said Don Skidmore, president of the United Auto Workers Local 735, which represents workers at the plant.

The plant produces three lines of automatic transmissions. GM previously announced plans to phase out production of two types of four-speed transmissions produced by the plant. Still, plant and union leaders were hopeful GM would still need the plant to produce the more fuel-efficient, rear-wheel drive six-speed transmission.

GM officials said Monday that production of the six-speed transmission has been halted at Willow Run, and production is being consolidated with the Toledo plant because of the steep drop-off in demand for new vehicles. The Toledo plant produces the same type of six-speed transmission as Willow Run and also is in the midst of retooling to produce a front-wheel drive six-speed transmission.

Skidmore and township officials said they believe GM also plans to produce more six-speed transmissions at a facility in Mexico.

One of the four-speed transmission lines at Willow Run will stop production July 31. The other four-speed transmission line will stop production in June 2010. Some workers will stay on to build components that are shipped to other plants until December 2010, GM officials said.

GM’s announcement is another financial blow to the township, already hurting from the housing crisis.

“We were already in a crunch with the economy,” township Clerk Karen Lovejoy Roe said. “We have the largest foreclosures in the county. Property values are down. Our revenues for next year are going to be the same as they were in 2004.”

The township estimates a fully closed Willow Run plant would generate $175,000 in taxes for the township in 2011.

Donald Grimes, an economics professor at the University of Michigan, said he doubts the property would be reused for other types of manufacturing.

“Manufacturing is shrinking,” he said. “It’s a huge plant, physically.”

Grimes said the plant’s proximity to Willow Run Airport could be attractive to a future user. Authorities have been discussing a regional agreement to develop the areas around and between Detroit Metro Airport and Willow Run Airport as an aerotropolis, a center for development of aviation-intensive businesses, as well as retail, residential, research and entertainment districts.

GM’s reorganization plan also calls for closing assembly plants in Pontiac and Wilmington, Del., this year. Plants in Spring Hill, Tenn., and Orion, Mich., will shut down production but remain on standby.

Along with the Willow Run plant, powertrain plants in Livonia and Flint and plants in Parma, Ohio, and Fredericksburg, Va. will close next year. Closure of a plant in New York was previously announced.

Stamping plants in Indianapolis and Mansfield, Ohio, also will close. A stamping plant in Pontiac will be idled but remain on standby. Closure of a stamping plant in Grand Rapids was previously announced.

GM says it will also close service and parts warehouses in Boston, Jacksonville, Fla., and Columbus, Ohio, by the end of this year.

All told, GM aims to trim its work force by 18,000 to 21,000 employees.

Human resources and corporate staff will help identify opportunities for salaried employees at Willow Run, said Daphne Adams, a plant spokeswoman. The UAW Local 735 is petitioning the union to request that GM transfer Willow Run employees to Toledo to produce the six-speed transmissions. Skidmore estimated 450 employees could be eligible for transfer, while the remainder could accept a buyout or be laid off.

This isn’t the first time Ypsilanti Township has lost a GM plant. In 1993, the automaker shut down a 2.5-million-square-foot assembly plant just south of the transmission plant, idling some 2,500 workers.

Since 2002, Ypsilanti Township has approved tax abatements on the Willow Run plant, and GM invested $577 million in the facility.

Reporter Dave Gershman can be reached at 734-994-6818 or dgershman@annarbornews.com.


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