WisBusiness: Janesville relieved to be spared in latest GM cost-cutting move

By Brian E. Clark

JANESVILLE – Jody Schiel breathed a sigh of relief on Monday when she learned that the General Motors assembly plant here is not one of nine facilities that will be shut down as part of a $7 billion cost-cutting move.

“This is wonderful news for my family and this city,” said Schiel, who runs Jody’s Gourmet Coffee on Milton Avenue.

The Janesville plant – GM’s oldest – has a payroll of nearly 3,900 and pumps more than $250 million annually into the Rock County economy.

“I have three relatives who work there,” she said. “And my father and two of my brothers are retired from there. It’s part of our lives.

“If that plant were to close, it would have hurt my business. It would have hurt everything in Janesville. I’m sure a lot of people are very relieved. It’s been a very big topic of discussion for my family.”

Mike Sheridan, United Auto Workers Local 95 president, said he was both “relieved and excited” by the announcement.

“This is a good day for Janesville, but I also feel for the people who are at the other plants who will be losing their jobs,” he said.

At a Monday morning press conference, GM CEO Rick Wagoner said the company will chop 30,000 workers, about 5,000 more than he had forecast this summer. Wagoner said the layoffs were forced by losses of nearly $4 billion this year.

Sheridan said he believed the Janesville plant survived because the union and management work well together and because both the state and GM have invested millions in the facility.

On a tour of the facility on Thursday, line workers appeared happy and waved at visitors who were touring the plant in a trolley.

“I think we’ve done a lot of good things here and that is why people were pretty positive that we’d remain open,” said Sheridan, who also represents Janesville in the state Assembly.

Neither of the U.S. plants that make sports utility vehicles will be closed, even though some current models get only 17 miles per gallon on the highway — some industry observers see that gas mileage as a hindrance to sales with recent spikes in gasoline prices.

That is because a third factory, in Silao, Mexico has shifted its production to pickup trucks. Sheridan said the change means the Janesville and Texas plant making SUVs are safe – if demand for the Suburbans, Tahoes, Denalis and Yukons they make does not continue to fall.

Sheridan praised GM for spending $175 million this year to upgrade the Janesville plant so it can produce the GMT900 series – vehicles that will be able to get up to 25 mpg. These SUVs will use a “displacement-on-demand” technology, that allows the vehicle to use only four cylinders – instead of eight – when it is cruising on the highway.

He also lauded Gov. Jim Doyle for pledging $10 million in state money for training associated with the new line and to help acquire new energy efficient technology. Because of the way the grants were structured, GM would have been required to return most of the money to the state if the plant closed, officials said.

“Governor Doyle has gone to bat for us,” he said. “That helps and it shows the state is committed to keep our plant going. You can’t ignore the relationship the state has with GM.”

Sheridan said a recent vote by UAW employees to pay more for their health insurance also sent a signal to GM executives.

“The vote here was 80 percent in favor of diverting future wages to health care,” he said. “We were way above other plants. I think our people here see the big picture. We understand.”

Sheridan said he is confident GM can turn its declining fortunes around.

“I think if gasoline prices stay less than $2.50 a gallon, we will be all right, especially with the improved mileage the new vehicles will be getting,” he said.

“But we’ve seen what happens when prices get up to $3 a gallon,” he said. “But cars have to be part of the GM family. They need to put more energy in the car market.”

Doyle said he, too, is pleased the Janesville factory will not close and plans to visit the factory today. In a letter last week, he urged GM officials to keep it open and today he applauded the company for today’s announcement.

“For more than 80 years, these Wisconsin workers have put their hearts into producing a top quality product for GM – and that dedication is not going unnoticed,” he said in a prepared statement. “I have worked closely with GM to assist the company in expanding its facilities in Wisconsin because its operations are vitally important for thousands of families in Southcentral Wisconsin. We have enjoyed a long and successful partnership with General Motors, and we look forward to continuing that relationship well into the future,” he said.

Janesville City Manager Steve Sheiffer also said he was elated with the news. And he praised GM workers for doing all they could to convince company officials that the plant should be kept open.

“This is the reward for their hard work,” said Sheiffer, who noted that the city had aided GM in recent years by helping fund a new road to the plant – Reuther Way.

“This is a productive plant and they have proved it,” he said.

But retired GM employee Rick Smith said he does not think the plant and its workers are completely out of the woods.

“Certainly, this is great news for now,” he said. “And the key, of course, is for GM to turn things around and start making money again.

“But I have to be a realist. You can’t lose $4 billion a year for very long and keep on going,” he said.

“I wish them all the best, but I’m also keeping my fingers crossed. My pension depends on GM’s staying solvent.”