Plan could keep GM Shreveport plant alive past 2012

[dwaxman1]

If General Motors Corp. completes its deal to sell the Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co., the local GM plant could continue to operate beyond the June 2012 closing date.



In an exclusive interview with The Times, Louisiana Economic Development Secretary Stephen Moret, who has been in regular contact with Tengzhong and GM, said they have mapped out a few ideas for the local plant.



"If the deal goes through "» and they choose Shreveport to produce the brand, (Tengzhong) will only need 25 percent of the facility," Moret said. "The concept we've been working on is to turn the Shreveport facility into a kind of automotive mall with Hummer as the anchor tenant."



The plant could be set up in a way where multiple companies could produce different vehicles at the plant.



"It's a big vision," he said. "We have certainly offered to negotiate incentives to achieve that outcome."



GM has received incentives from the parish and state, including an exemption from sales taxes on all equipment and donated land from the Caddo Parish Commission for plant expansions in recent years.



However, one of the major issues with the local plant is its paint facility, which needs major upgrades.



At first, officials believed updating the facility would cost nearly $200 million. But during a recent tour of the plant, GM and Tengzhong officials estimated it will take only about $40 million to modernize the paint facility, Moret said.



But all of these plans are speculative. Before the plan or an incentive package can be established, the deal between GM and Tengzhong has to get done.



"Both parties say the deal is on track and should get done by the first quarter this year," Moret said. "But we also expected it to get done by the fourth quarter of last year."



Officials on both sides of the table have repeatedly said Chinese regulatory approval is the final hurdle to clear, but it has proven to be a high one. In fact, Tengzhong has suspended negotiations until the Chinese government gives its blessing.



When the deal was announced last year, GM officials said part of the agreement meant Tengzhong will enter into a long-term contract assembly, key component and material supply agreement with GM.



Additionally, Tengzhong will transition overseas production of the H3 from a plant in South Africa to Shreveport, bringing additional production of 8,000 to 14,000 vehicles.



Assuming the deal makes it through the Chinese regulatory process, GM would continue to make Hummers for the company on a contract basis until 2012.



Caddo Parish Administrator Woody Wilson said the parish is in a holding mode until an announcement about the deal is made.



Wilson and other local and state officials have met numerous times with GM leadership and Louisiana's congressional delegation in Washington, D.C., about the plant.



"We have also asked the Obama administration to look at what the (Troubled Asset Relief Fund) can provide as far as incentives for to keep the plant in Shreveport," Wilson said. "We will continue to look at any options and work with everyone to make sure that plant stays here."



If the plant leaves, the entire community would be impacted, Wilson added. GM is the second-highest taxpayer in the parish. Only AEP Southwestern Electric Company pays more in taxes.



The taxes GM pays on its property help fund entities like the Caddo Parish sheriff's office, Caddo Parish School Board and Caddo Fire District 3.



Under the current millage rates, GM pays $1.9 million a year with its property assessed at $55 million, according to Caddo Parish Assessor Charles Henington Jr. GM only pays taxes on a portion of the local facility. The newest part remains exempt from all property taxes until 2012.



Meanwhile, the local facility continues to produce the Chevrolet Colorado and GMC Canyon. Production of the Hummer H3 and H3T was suspended this year, due to decreased demand for the vehicles. Total Hummer sales for 2009 were down 67 percent compared to 2008. Last year, 9,046 Hummers were sold. In 2008, the number was 27,485.



The plant's other two products aren't selling so much either. In 2009, there were 32,412 Colorados sold, down 40 percent from 2008. The Canyon sold 10,107 units, down 32.5 percent from 2008.



GM recently announced the plant will shut down for two weeks beginning May 3. The plant's annual summer shutdown will begin June 28.



It is not surprising to see GM add more shutdown weeks, said Bill Visnic, a senior editor with Edmonds AutoObserver.



"Between the two, that's 42,000 trucks for the whole year," he said. "That would've been a good quarter for them not too long ago."



For those at the local plant, news of the shutdown was just another day at the office.



Despite news of the shutdown and the delay in getting the Hummer deal done, people at the plant are staying optimistic, United Auto Workers Local 2166 president Doug Ebey said.



"It's been quite a roller coaster ride," Ebey said. "But our workforce is very resilient. We have been through a lot. This is nothing new to a lot of our people."





Cedit to: http://www.shreveporttimes.com for the story

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