December 23, 2008 - GM Janesville Plant, Janesville WI

Nearly the End of the Line for S.U.V.’s

Even a federal bailout could not save three of the last remaining plants in the United States still making sport utility vehicles.

Reeling from its financial problems and a collapsing S.U.V. market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big S.U.V.’s ruled the road. The moves followed the shutdown last Friday of Chrysler’s factory in Newark, Del., which produced full-size S.U.V.’s.

The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big S.U.V.’s since the early 1990s.

Most of the plant’s 1,100 remaining workers were not scheduled to work the final day, but many showed up for an emotional closing ceremony. Dan Doubleday, who had 22 years on the job, broke down in the plant’s snowy parking lot afterward.

“I was a fork lift driver,” he said, glancing at his watch through welling tears. “Until about seven minutes ago.”

At the Mocha Moment coffee shop around the corner, two co-workers, Michael Berberich and Lisa Gonzalez, exchanged Christmas presents just as they had most years since they were both hired in 1986.

“For a while we had it made,” Ms. Gonzalez said. “I just wish it would have lasted.”

The fate of the Janesville, Moraine, and Newark plants was sealed this spring, when rising gas prices suddenly made S.U.V.’s unpopular, and long before President Bush approved $17.4 billion in emergency loans last week to keep G.M. and Chrysler out of bankruptcy.

While the overall new vehicle market has dropped 16 percent so far this year, sales of big S.U.V.’s have plummeted 40 percent.

With consumers shifting rapidly to smaller, more fuel-efficient cars, G.M. no longer needed to produce big S.U.V.’s in Janesville as well as in a plant in Texas.

Still, some Janesville workers felt G.M. broke a pledge in its 2007 contract with the United Automobile Workers to keep the factory running.

“We didn’t deserve this,” said John Dohner Jr., shop chairman at U.A.W. Local 95. “We’ve all put a lot of hard work into trying to secure a future here.”

Shrinking market shares have forced G.M., Chrysler and the Ford Motor Company to close more than a dozen assembly plants and shed tens of thousands of workers in recent years. The moves have devastated communities from Georgia to New Jersey and from Michigan to Oklahoma.

Even so, G.M. and Chrysler are likely to close more manufacturing facilities as they overhaul their operations to meet conditions of the federal loans.

“The companies are moving very fast now to close plants, but it may be too little, too late,” said John Casesa, a principal in the Casesa Shapiro Group, a consulting firm. “They’re doing now what they should have done 15 or 20 years ago.”

G.M.’s Moraine plant was the last to build the midsize Chevrolet Blazers and GMC Envoys that were once among the best-selling vehicles in the country.

The Janesville factory built three of the biggest and most profitable vehicles in G.M.’s lineup, the Chevrolet Tahoe and Suburban and GMC Yukon. The Chrysler plant in Newark also made big S.U.V.’s — the Dodge Durango and Chrysler Aspen.

Their closings leave the Big Three with only one factory each still devoted to making traditional big S.U.V.’s — Ford in Kentucky, G.M. in Texas, and Chrysler in Detroit.

The Janesville plant once employed more than 5,000 workers and turned out 20,000 Tahoes, Yukons and Suburbans each month. With its closing, residents worried about the future of this city of 64,000 people, about 75 miles southwest of Milwaukee.

“Janesville will lose a lot,” said Patti Homan, as she finished a strawberry-topped waffle at the nearby Eagle Inn restaurant. “I expect my electricity to go up, water rates to go up, property taxes to go up, and the value of my home to go down.”

Ms. Homan worked in the plant for 23 years, and her father, brother and husband all retired from the factory. “It’s generation after generation for so many families here,” she said.

The empty feelings in Janesville were echoed in Moraine, a suburb of Dayton and last week at the Chrysler plant in Newark.

More than 1,000 workers were laid off at the Moraine plant. Under terms of the U.A.W. contract for all its members, they and the workers in Janesville and Newark will collect unemployment checks and payments from G.M. that together equal about 80 percent of their take-home pay.

But those payments will only last about a year. And with the U.A.W. prepared to suspend its “jobs bank” program as a condition of the federal loans, there will be no safety net after that.

Some workers will have an opportunity to transfer to other plants. But with the industry contracting so quickly, there is little job security in making a move.

“I can’t risk transferring,” said David Williams, one of the remaining 1,100 workers at the Newark plant when it closed. “I don’t want to go 1,200 miles away to get laid off again.”

Mr. Williams installed a sunroof on the last Dodge Durango to come down the assembly line in Newark. Now he plans to take massage-therapy classes and pursue a new career far from the factory floor.

“Enough with the concrete,” he said. “It’s time for some carpet and climate control.”

On the last day for the Newark plant, 84-year-old Woody Bevans unlocked the weight room at the U.A.W. union hall and began brewing coffee for a handful of retirees who passed the time there.

A Texan who started work at the plant when it opened in 1952, Mr. Bevans recalled how the factory was first used to build tanks for the Korean War. He retired in 1983, but thought the plant would go on forever.

“We had hope right up until the last,” Mr. Bevans said. “We’re really going to feel it when it shuts down. There’s a big chain reaction, believe me.”

The University of Delaware is negotiating with Chrysler to buy the plant and redevelop the 270-acre site with academic buildings and a technology park.

After the plant closed, one of the workers, Merle Black, drove directly to a Delaware Department of Labor office and registered for job openings. He is hoping to become a heavy equipment operator, and possibly be involved in the demolition of the factory where he used to install airbag parts.

“If I can get in there to help take it apart, I don’t mind,” Mr. Black said. “That’s where I spent the last 19 years. That’s what I know.”

The closing of an auto plant draws a crowd, with some people somber and nostalgic and others defiant and energized.

Outside the Janesville plant on Tuesday, a few workers posed for pictures in front of the building while others said their goodbyes as they loaded gear in their snow-covered S.U.V.’s

One man had two small children with him on the last day. Another man wearing an orange ski mask waved a large American flag as departing workers drove by.

Many of the workers trudged over to a one-story, cinder-block building on the grounds of the factory, a bar called the Zoxx 411 Club. A sign said “customers only” and forbade reporters and media from entering.

Outside, a cluster of reporters, including a documentary film crew from Japan, tried to interview workers about the last days of the S.U.V. plant.

“It’s been a good ride, man,” said Frank Hereford, a body shop worker, as he left the plant with a microwave oven that heated up countless lunches during many of his 38 years with G.M. “Good people worked down here.”

Original Story - New York Times

Update February 12, 2009

Ex-G.M. Workers Try to Reboot Their Lives

Kevin Corkhill, standing in front of the General Motors plant in Janesville, Wis., hasn’t decided what he will do now that he has been laid off.

Kevin Corkhill grew up in a time and place where manufacturing was king. But ever since he was laid off from the gargantuan General Motors plant here, Mr. Corkhill seems bewildered by what the future holds.

He still has not decided whether to try to transfer to another G.M. plant, change occupations or return to school. Visiting the local United Automobile Workers hall recently, Mr. Corkhill stopped by a musty display case to show his 8-year-old son a black-and-white photograph inside — it was Mr. Corkhill’s grandfather carrying an artillery shell made at the plant during World War II.

“My grandfather worked here, and my father worked here,” he said. “The one thing my father told me is you work hard to make things better for the next generation, but now I worry we won’t be able to do that anymore.”

He turned his head to hide his tears from his son.

In this city, the loss of the 90-year-old G.M. plant and its 2,500 jobs has created a swirling mixture of anger, confusion, worry and hurt, underscoring how the recession is raising anxiety among workers nationwide. Combined with the shuttering of several nearby suppliers, the G.M. closing meant a loss of 4,000 jobs in this city of 64,000.

Their union contract has given these workers more relief than many.

With few local employers hiring, more than 1,000 of those laid off have returned to school, seeking to reboot their lives by studying welding, nursing, cooking and other fields, thanks, in part, to the contract’s tuition assistance.

The contract also provides a substantial financial cushion: 48 weeks of unemployment benefits at three-quarters pay, and health insurance. But when that runs out, it will be hard for them to find jobs paying close to the $28 an hour they averaged assembling Chevy Tahoes and Suburbans and GMC Yukons.

“We found that 76 percent of the laid-off people we’ve worked with made $20 or more an hour,” said Robert T. Borremans, executive director of the Southwest Wisconsin Workforce Development Board, which helps retrain and find jobs for laid-off workers. “There aren’t many $20-an-hour jobs in the area. If people need that much to maintain their lifestyle, they’ll need to look elsewhere.”

The hope is that things will be better a year from now. “What surprises me is how resilient and optimistic a lot of people have been,” said Mr. Borremans, whose agency nearly fills a shuttered Kmart. “They’re willing to work and rebuild.”

Many are moving on. Kimberly Pope, after 30 years at G.M., where she worked as an electrician, has applied to train as a radiology technician. Bill Truman, a laid-off truck driver for a G.M. supplier, is planning to study logistics and warehouse management. Diane Kudrna, one of 800 workers at the recently shuttered Lear factory here that made S.U.V. seats, has become a $12.50-an-hour veterinarian’s assistant.

Robert Phelps, right, in a culinary class. He worked at Lear, an auto supplier, in Janesville for 13 years before being laid off.

And Robert Phelps, after 13 years at Lear, has plunged into a two-year culinary program at Blackhawk Technical College, eager to pursue his long-deferred dream of opening his own restaurant or catering service. Returning to school became financially possible, he said, only because his wife recently landed a job as a secretary for the school district.

“Things happen for a reason,” Mr. Phelps said. “I strongly feel there was some intervention here. The plant shutdown opened up a lot of doors for me.”

Blackhawk Tech’s enrollment has jumped by 1,800 over last year, a 23 percent increase.

“One-third to one-half of the people laid off will come our way,” said Eric Larson, the school’s president. “They’re looking for short-term education that will lead to high-wage jobs. My concern is, ‘Will the jobs be there once we get them retrained?’ ”

John Beckord’s job is to help make sure there are jobs. As the president of Forward Janesville, an economic development agency, he is optimistic, boasting that Janesville is centrally located between Milwaukee, Chicago and Minneapolis and has a hard-working, well-educated work force. Janesville just spent $72 million renovating its two high schools, and there are three state colleges within 10 miles.

“You have an eager local government that is willing to roll out the red carpet for companies, not the red tape,” Mr. Beckord said.

That may not be enough to attract business in a downturn. For that reason, many workers with 20 or more years at G.M. are trying to transfer to other G.M. plants and reach 30 years, which would entitle them to a full pension of $36,000 a year. Problem is, beleaguered G.M. is hiring few transfers.

Workers fear their generous safety net will prove inadequate if the recession is long and deep. What will happen to their families if they cannot find new jobs before their benefits run out?

Some pray that before their 48 weeks of unemployment benefits run out, G.M. will reopen the plant, enabling them to return to their jobs.

Others call that a pipe dream; Mr. Borremans termed it “reality avoidance.”

Mr. Corkhill, the grandson of the World War II veteran, had hoped to transfer to another plant, but has become pessimistic about his chances. To make ends meet, he has eliminated his telephone landline and cut back on premium cable television.

“I’m very angry about the whole economic picture,” he said.

The mood was far different last February when a candidate named Barack Obama campaigned at the plant, trumpeting a $150 billion jobs plan and saying that with some retooling and federal aid, “this plant will be here for another 100 years.”

But soon oil prices soared, the economy swooned and a 40 percent drop in S.U.V. sales sealed the plant’s fate.

Ms. Pope, the former G.M. electrician — proud that she sent her two children to Marquette University and the University of Wisconsin — worries now that “there won’t be opportunities for people like myself to make a middle-class income because the industrial base is so eroded. The jobs that pay $25, $30 an hour where you can afford to help your kids through college and not worry about money, those jobs are becoming more and more scarce. G.M. gave me a wonderful opportunity and my kids a wonderful opportunity, and I don’t see those opportunities around anymore.”

Andy Richardson, head of the U.A.W. local in Janesville, hopes to work at another G.M. plant.

That is why Andy Richardson, president of the U.A.W. local here, and a 24-year G.M. man, hopes to transfer to another plant. He plans to move without his family — his wife has a good job at a credit union, his two daughters are star athletes, and he thinks selling their house would be impossible.

“I want to be able to come back on weekends or every other weekend,” he said. “I’ll miss my family.”

He hopes to transfer no more than five hours away, perhaps to Fort Wayne, Ind., or to Lansing, Mich. He, too, tried to hide his tears.

Update Story - New York Times

Update March 17, 2009

Wagoner offers no hope for Janesville assembly plant

General Motors Chairman Richard Wagoner said Tuesday the company has no plans to reopen its Janesville assembly plant as the auto giant fights for its survival.

"Based on the way we see things, it's not something that's live that we're considering now," he told reporters at a breakfast sponsored by the Christian Science Monitor.

Roughly 4,500 people in the Janesville area have lost their jobs - either at the plant or at companies that supplied GM - in the past 14 months because of the company's decision to end production of its sports utility vehicles there.

Company officials initially planned to shut down the plant by 2010, but a major slump in auto sales and plummeting demand for fuel-thirsty SUVs hastened the closing. The last Chevy Tahoe rolled off the plant late last year.

Asked whether the company would consider retooling the factory to build other products there, Wagoner said the Janesville community should not be overly optimistic: "The fact is as the industry stays weaker, there isn't basic demand to use that sort of production capacity."

Local and state officials have been doing everything they can to entice GM to reopen the plant. Some say they remain hopeful it could happen despite what one official called the strongest statement yet to the contrary.

"We're all still holding out hope that we could do something," said Wisconsin Assembly Speaker Mike Sheridan, a Janesville Democrat who worked at the plant for 31 years.

But he admits Wagoner's comments are the strongest to date that GM likely won't return to Janesville any time soon.

Despite the industry's recent troubles, Wagoner spoke confidently Tuesday about the future of GM, saying executives there are "reinventing the company for the next 100 years."

"This isn't just about limping along," he said, arguing the company is positioning itself to be a leader in fuel-efficient and alternative fuel vehicles.

General Motors has received about $13.4 billion in federal government loans to help the company stay afloat. The company is seeking an additional $16.6 billion in U.S. loans.

GM previously argued it needed at least $2 billion more by the end of the month to avoid running out of money. But Wagoner recently said GM did not need the money this month after all. He explained Tuesday that executives were able to defer costs and have done more to increase revenue and cut other costs than initially expected. GM must submit detailed plans to the federal government by March 31 explaining how the company can become viable again and begin repaying the government loans.

Auto suppliers that rely on the Big Three U.S. auto companies for their survival also are asking the federal government for help, something U.S. officials are considering, according to Steven Rattner, an adviser to an auto industry task force set up by the Obama administration.

"Hopefully, help is on the way soon because it's getting pretty drastic for suppliers," Wagoner said.

The negotiations between GM and the federal government come as public outrage grows over federal bailouts of U.S. companies, most recently the insurance company AIG.

"It would be better for all of us if it wasn't playing out that way," Wagoner said.

The company also is in talks with its bondholders and the United Auto Workers union to swap billions of dollars of debt for equity in the company.

"Everybody is sacrificing," Wagoner said. "Everybody's got skin in the game."

Wagoner did not rule out the idea of a pre-packaged bankruptcy to help restructure the company but said it could scare off customers and lead to the firm's liquidation.

David Cole, chairman of the Center for Automotive Research in Michigan, called Wagoner's assessment of the company Tuesday "pretty realistic" and shows the firm's commitment to innovative fuel technologies.

"They don't want to compromise their ability to do big things once the healing occurs," Cole said.

People in Janesville are crossing their fingers for a quick GM recovery, said Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board.

"Until the fat lady sings and says there's not going to be any General Motors presence in Rock County, even though it's remote, there's still optimism," he said.

Update Story - Milwaukee Journal Sentinel