GM's Spring Hill Plant Could Be At Risk

Auto industry analysts suggest automaker's Spring Hill, Tenn., plant could become vulnerable as the Obama administration makes steeper demands in return for federal financial support.

SPRING HILL, Tenn. (AP) -- Auto industry analysts suggest General Motors Corp.'s Spring Hill plant could become vulnerable as the Obama administration makes steeper demands in return for federal financial support, and workers say they are nervous.

President Barack Obama had said GM's initial plans to become viable didn't go far enough. Last week, he told the company it had 60 days to make more cuts and get more concessions from bondholders and unions, or it won't get any more government help.

"We're a little nervous about what's going on with the decisions being made about the plants," said Michael Herron, chairman of United Auto Workers Local 1853, which represents the 2,911 hourly workers at Spring Hill.

"We don't know when the decision will be made," he told The Tennessean, "but I believe they are going to move very, very quickly, and we may be at risk."

Industry analysts say Spring Hill is vulnerable even though the carmaker spent $690 million to upgrade the facility in 2007 to prepare to build the new Chevrolet Traverse crossover utility vehicle, which went into production last fall.

Sales of the Traverse have been below expectations, and the Spring Hill plant is operating at an estimated 24 percent capacity.

Erich Merkle, a Grand Rapids, Mich.-based auto analyst, thinks Spring Hill could be jettisoned in favor of GM's newest plant in Lansing, Mich., which makes vehicles similar to the Traverse and has excess capacity to take over Spring Hill's current production.

The Delta Township plant in Lansing, which opened in 2006, makes three other crossover vehicles that are closely related to the Traverse: the GMC Acadia, Buick Enclave and Saturn Outlook.

At current sales levels, all four vehicles could be built at either plant, but politics could give the Michigan plant the edge, Merkle said. "Spring Hill could be on the bubble because it's in a red state, and Michigan is a blue state," Merkle said. "The governor of Michigan is a Democrat, too, and she needs all the plants she can get."

U.S. Sen. Bob Corker, R-Tenn., said last week he's concerned that Spring Hill could lose out if the Obama administration chooses which plants to close based on how a state voted in last fall's presidential election. Tennessee went "red," with a majority of voters casting ballots for the Republican candidate, U.S. Sen. John McCain of Arizona.

Opened in 1990 to assemble the new Saturn brand of economical small cars, Spring Hill is the third-newest GM assembly plant in operation. Lansing is GM's newest, built at a cost of $1.5 billion in 2006.

Saturn production ceased in March 2007, and the plant was refurbished at a cost of several hundred million dollars to build the new Chevrolet crossover.

Besides the Traverse, the Spring Hill facility also builds fuel-efficient four-cylinder Ecotec engines for a variety of other GM vehicles. The plant produced 418,566 of the engines last year for such models as the Chevrolet Malibu and Cobalt sedans.

Whether the plant would retain the engine work even if its vehicle-assembly operations were shut down remains unclear, and a GM manufacturing spokeswoman declined to discuss the possibilities of closing any of the automaker's remaining facilities.

The Lansing and Spring Hill plants should be safe if operating decisions are made rationally, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

"Spring Hill is still a relatively new plant and has been refurbished to make it much more flexible than it has ever been," he said. "It's a very good plant, and when the economy recovers, those GM crossover vehicles are going to be very strong.

"It would be a shame for GM not to be able to meet consumer demand because they closed one of the plants. If they walk away from that plant, that would be a very strategic error," Cole said, "but in politics anything is possible."

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