GM's Lordstown investment met with praise

May 3, 2014 at 12:10a.m.

YOUNGSTOWN

The outlook of the Lordstown plant and its workers became more secure and flexible Friday when General Motors announced it is investing $50 million to build the next generation of the Chevrolet Cruze in the Mahoning Valley, a United Auto Workers official said Friday.

“It speaks volumes for the team members and the complete confidence” that GM has in them, said Glenn Johnson, president of United Auto Workers Local 1714.

To date, GM has spent more than $600 million to build its top-selling compact car in Lordstown, and Friday’s announcement shows the company plans to stay in Lords-town for the foreseeable future, he said.

But when GM announced its initial investment of $351 million to shift production at the plant from the Chevrolet Cobalt to a new, fuel-efficient compact sedan, success was anything but guaranteed.

The Cobalt wasn’t selling well, and a poorly run GM was creeping toward its 2009 bankruptcy and subsequent government takeover and restructuring.

At the time, workers were “very skeptical of the situation” and wondered if the plant could even survive, Johnson said.

But GM doubled down on its investment. In 2011, the company spent $5.5 million to improve the facility’s stamping and body shops, and the following year it announced $200 million would go toward tooling and equipment for the Cruze’s remodel.

Today, Lordstown is running three shifts of production, with a Saturday shift scheduled for later this month. The Cruze is GM’s second-best-selling vehicle overall, and analysts and officials acknowledge that it was a crucial part of the company’s rebound from the federal bailout of Detroit.

Jay Williams, former Youngstown mayor and the Obama administration’s “auto czar,” in February touted Lordstown as the “go-to plant for the corporation in its crisis time and its decision to restructure.”

UAW workers had to take a number of concessions to keep production going, including cutting shifts, but the Cruze rolled out to a positive reception.

The plant also helped GM transition into a segment of the auto industry that it had long ignored.

“The Cruze was a really pivotal car for GM,” said Jessica Caldwell, senior analyst with Edmunds.com. “It kind of made Chevy and GM more of a player in the compact-car segment.”

Though it hasn’t received a remodel since it launched in 2010, Cruze’s fuel efficiency, design and features struck a chord with consumers and established it as a force in one of the industry’s toughest segments, she said.

It is not clear when the next generation will hit dealer lots, but what is clear is that it will be built in Lordstown.

GM’s $50 million will pay for upgrades to the plant’s existing press room, which stamps out the car sides, doors and other body parts.

It also will buy a new trim shop. The first stop after the painting stage, the trim shop installs everything that goes into the car’s interior, from the seats to the carpet and the steering wheel.

The new shop will prepare Lordstown to build the remodeled Chevy Cruze, but it also will provide the “flexibility and versatility” to potentially build other models as well, Johnson said.

When the recession hit, automakers had to scale down their production in response to a steep drop in demand. But buyers are now coming back into the market in force, with U.S. car sales set to exceed 16 million for the first time since 2007.

“As the sales rate continues to grow, production has to stay in line,” Caldwell said. “Investment in factories — and keeping production high — is something that’s going to need to happen.”

High production rates, combined with a desire to keep costs down and a push to develop commonalities across vehicles, could mean automakers will eventually move toward producing multiple cars at one plant, Caldwell said.

For now, GM’s investment means more financial security for the Lordstown plant’s 2,900 UAW members, who will engage in more discretionary spending, Johnson said.

“It’s going to be nothing but a huge impact on the economy of the Valley,” he said.

Friday’s news spread quickly, prompting responses from government officials, who praised GM’s continued involvement in the Valley.

“This is good news,” said state Rep. Sean O’Brien of Brookfield, D-63rd, a Cruze driver himself. “It took a team to come together and realize the potential” of the Cruze.

U.S. Rep Tim Ryan of Howland, D-13th, was part of that team. He touted GM’s investment and the plant’s ability to manufacture a quality product.

“This investment is a testament to the cutting edge, innovative work done in Lordstown day in and day out. The Lordstown plant has turned out more than 15 million vehicles since it first opened its doors, and this investment ensures that American auto manufacturing will continue to thrive right here in our backyard.”

GM also announced the millionth Cruze rolled off the lines April 10. UAW Locals 1714 and 1112 bought the “historic” car late this summer, with the proceeds going to local charities.

“It will stay in the Valley, and we’re really proud that piece of history will remain in the Valley,” Johnson said.