GM Bets on Hybrids, Factory in Maryland
Thursday, February 2, 2006
WHITE MARSH, Md., Feb. 1 -- It's a relatively modest project by auto industry standards -- General Motors Corp. will sink $118 million into its White Marsh transmission plant, adding 87 jobs -- but it was the symbolism of Wednesday's announcement that brought out the automaker's chief executive, the state's governor, a U.S. senator and union leaders.
GM said it would upgrade the plant, which builds automatic transmissions for heavy-duty trucks, to make transmissions for fuel-efficient hybrid truck engines by 2007. GM said it is taking a step toward beating back Japanese competitors and pulling itself out of a deepening financial crisis.
Chairman and chief executive G. Richard Wagoner Jr. called GM's new hybrid system a "leap forward" for the automaker. Richard Shoemaker, the United Auto Workers vice president who oversees GM workers, called the automaker a "real American company." Shoemaker said he was proud of GM's move to build hybrid parts and vehicles in the United States. "It's significant for many reasons -- it strengthens GM's product line and it's another positive step to address growing concern for greater fuel economy," he said.
Wagoner said hybrids and other advanced technologies are key to GM's future. He said GM is also pushing for greater supplies of ethanol to power millions of vehicles already on the road. "We can pull a range of levers rather than trying to find a silver bullet," Wagoner said in a news conference at the plant, northeast of Baltimore.
The White Marsh plant employs about 440 workers, including 372 hourly employees represented by the UAW. General Motors said it will begin production of the new hybrid system at the plant next year for installation in the Chevrolet Tahoe and GMC Yukon models, two of the fleet's larger sport-utility vehicles. GM said the hybrid models will get about 25 percent better fuel economy than their non-hybrid counterparts. The system will then be put in the Chevrolet Silverado and GMC Sierra pickup trucks the following year, GM said.
GM faces an uphill battle. Last year, the company lost $8.56 billion, its biggest loss since 1992, and said it would cut 30,000 jobs by 2008. Wagoner and other GM executives have said they were caught off-guard by the precipitous drop in SUV sales, a major driver of the automaker's profits. To shore up GM's finances, Wagoner has been slashing costs, jobs and factories in the United States.
But GM enjoyed a rare double shot of good news Wednesday. The world's largest automaker was able to announce job additions, rather than cuts, and its January sales rose 5.8 percent from January 2005.
Wednesday's announcement was met with cheers from workers on the factory floor. Don Burks, the UAW shop chairman at White Marsh, said the plant had to compete with other facilities in the United States and around the world to get the hybrid work. "What we're demonstrating here is that [no manufacturer] has to go outside the country," Burks said. "You can be competitive with a union workforce."
A year ago, GM closed its Baltimore assembly plant, which built vans, eliminating about 1,100 jobs. Burks said about 500 GM workers from the old plant remained in the area without jobs. They will be the first to be called for jobs at the transmission plant, based on job security provisions of the UAW-GM contracts, Burks said.
Casey Selecman, manager of North American powertrain forecasts for CSM Worldwide, said automakers are struggling to determine market demand for hybrids. Selecman said GM's strategy is betting that consumers will respond to hybrid versions of its biggest vehicles -- the large SUVs and other trucks -- that have cost the most to keep filled with gas.
GM is also on the defensive against Toyota Motor Corp., which is threatening to overtake GM as the world's No. 1 automaker. In the United States, Toyota's sales have been lifted by hybrid sales -- especially the Prius sedan, which had sales of 107,000 in 2005, double its 2004 numbers.