GM Orion Assembly plant expects to produce 160,000 vehicles a year
August 17, 2011 - By Joe St. Henry
|The new Chevrolet Sonic floats along the assmebly line in Orion Township. Photo by G. Ouzounian. (click for larger version)|
It wasn't too long ago the massive GM Orion Assembly plant on Brown Road sat idle, awaiting its fate as the automaker made crucial decisions about its future.
Today, much to the delight of Orion Township, the future of GM includes the fuel-sipping Chevrolet Sonic and Buick Verano small cars built at the 4.3 million square-foot production facility, which opened in 1983.
According to Plant Manager Alicia Boler Davis, GM invested $545 million to gut, upgrade and retool the facility to produce the new models, including construction of a new paint shop.
"At one point during the update, this building was almost completely empty," said Boler Davis, who lives in the area and has overseen operations at Orion Assembly for 20 months. "You could stand on one end and see clear to the other side. It really is amazing what we accomplished in a short timeframe to prepare for the new models."
Initial production of the Sonic began earlier this month, with Verano production scheduled to start by the end of the year. When the plant reaches full operating capacity, it will produce 160,000 cars annually. It operates two shifts daily, employing 1,500 hourly and salaried employees, the majority of whom returned to GM Orion Assembly after it was given new life.
"Orion features an experienced and dedicated workforce," Boler Davis said. "They're excited to have a second chance and are doing whatever it takes to succeed and build high-quality cars."
The hourly workers at the plant are represented by UAW 5960. President Pat Sweeney said the members recognize how important the assembly plant is to the Lake Orion community, both in terms of the tax base and jobs. He said the union also recognizes what a successful launch of the Sonic and Verano means to the future of the company.
"We want this launch to be the best ever for GM and are committed to building high-quality small cars at Orion," Sweeney said.
Boler Davis said GM is the only domestic automobile manufacturer to now build a small car in the United States.
"GM is fully committed to the Orion plant and its employees," Boler Davis said. "These new cars are a key component of our product portfolio."
GM combined the best practices of its own global assembly operations and those of other automakers to build the state-of-the-art facility. The assembly line is about half the size of what it was in the past, reducing the number of workers needed to build the cars and lowering energy costs. The plant derives a significant portion of its power from landfill gas generated by two nearby recycling and disposal facilities.
The company also reached an agreement with UAW 5960 to institute a two-tier wage system at the Orion Assembly plant that pays newer workers "entry level" wages of about half the seasoned UAW worker. Sweeney said 40 percent of Orion Assembly's workers are classified as tier-two employees, earning the lower wage. He added most GM plants that also use the two-tier system feature a 75/25 split.
(The Detroit Free Press reported this week that the two-tier wage system will be an important issue during all of the Detroit-based automakers' contract negotiations with the UAW this fall. How this may impact GM Orion Assembly is unknown.)
The use of employees from 3rd party automotive suppliers working side-by-side regular workers also helps GM reduce costs, added the UAW 5960 president.
"GM has figured out many ways to become more profitable at building small cars," Sweeney said.
Boler Davis added that it is not easy to build a small car competitively and, working closely with the UAW, they are doing a lot of things differently than in the past. She said all of the employees are very engaged in the relaunch and have a lot of ideas of how the plant should be run, which she appreciates.
"There is a lot of optimism right now," the plant manager said.
Mike Jackson of IHS Automotive, a consultancy in Northville, said GM also was able to reduce the cost of building these small cars by utilizing a global automobile platform. This enabled the company to significantly upgrade the content of the Sonic and Verano compared to entry-level vehicles of the past, something today's buyers demand.
"With the rising cost of gas, people's perceptions of small cars are changing and this should position these models well," Jackson said. The Sonic hits Chevrolet showrooms in October. It is reported that the Sonic will start at $14,495 and travel up to 40 miles per gallon of fuel; details on the Verano were not available at this time.
GM's decision to build its small cars in Orion Township also was heavily influenced by the generosity of the State of Michigan, Oakland County and Orion Township.
To keep Orion Assembly open and encourage further GM investment in manufacturing operations in the state, the government entities offered a combined incentive package worth nearly $1 billion in tax abatements and federal job training funds over 20 years to the automaker, according to Deputy County Executive Matt Gibb, who at the time was Orion Township Supervisor.
The incentive package included a 100 percent personal property tax abatement for 25 years from Orion Township, covering equipment in the plant with an initial taxable value estimated up to $80 million. As this equipment depreciates, the annual abatement is adjusted accordingly, Gibb explained. The township also agreed to construct a water storage facility on site, helping GM save an estimated $250,000 per year in water costs.
"There's no question we had to do it (offer such an incentive package)," Gibb said. "If this plant would have gone down permanently, the job outlook for this area would have destabilized. We're talking about 5,000-6,000 jobs, including GM employees, supplier positions at the plant, warehousing jobs and all the local businesses that rely on spending from workers."
According to GM economic impact data updated in May, the Orion Assembly plant accounts for $42 million in wages, $8.5 million in payroll taxes and $1.8 million in property taxes each year.