General Motors Wisconsin Plant Waiting for Axe to Fall

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). General Motors Corporation (NYSE:GM )(NYSE:) (Detroit, Michigan) is having a struggle these days, in more ways than one. The company, as the world knows by now, is struggling to stay afloat in a highly competitive and ever-changing industry, while trying to hang on to its old way of doing things.

But this time, GM is being forced to face the hard fact that just doing more of the same thing will no longer solve its problems (if it ever did). It must not only think outside the box on this one, it may have to reinvent itself from the bottom up, which isn't entirely a bad idea. And that doesn't mean squeezing the lifeblood out of its gasping suppliers, either. A little keiretsu here wouldn't hurt a bit.

Stockholders are irate, and at last week's annual stockholders' meeting, they even suggested that is was time for a change in the arrogant leadership of the beleaguered corporation, among other suggestions, which were mostly talked down by a glib Rick Wagoner. This is General Motors, after all, and it has a ready answer for most anything. Only time will tell if it has some appropriate and profitable solutions for its own problems.

GM came to the meeting armed and dangerous, announcing its plan to close several unspecified plants and lay off some 25,000 employees over the next five years. One can imagine the chain of reaction this announcement set off - from employees, from union honchos, from economic development gurus, and even from state governors and the stock market. GM apparently means to let this thought ferment for a while, before it announces specific locations and dates of plants to be closed, in an attempt to milk leverage from upcoming union negotiations. It's been a long time since this, or any, company had such leverage vis-à-vis the unions.

It has been suggested that the aging Janesville, Wisconsin plant will be the first to be closed, but a likely argument against it is the fact that GM is going ahead with a $175 million retooling project that will enable Janesville to produce the new GMT900 series vehicle. It's highly unlikely that GM would invest that much money into a plant slated for closure. In five years...maybe... depending upon several factors, not the least among them being the price of gasoline, since Janesville makes primarily gas-guzzling SUVs. However, workers are already being trained on a mock-up assembly line for the new procedures to be used on the latest vehicle. And the plant is gearing up for its usual two-week maintenance shutdown during the first two weeks of July. So far this year, Janesville has been idled during the weeks of January 3, March 21, March 28, and April 4, to cut production of its overstocked vehicles. GM has extended summer shutdown times at several other plants.

From the city of Janesville's point of view, if GM goes, it will not be the town's only loss, by any means. Janesville's three top employers are GM suppliers. GM itself employs more than 3,800 workers there, and if added to the employee count of its local suppliers, there are some 5,100 people whose jobs are on the line. That adds up to dangerously close to 10% of Janesville's total population (62,000). The total fallout could be disastrous.

For example, SSI Technologies Incorporated (Janesville, Wisconsin), with 800 employees in its Controls Division and another 300 in its Sinter Division, stands to lose big, should GM close. SSI, which was founded in 1982, makes motion sensors and ABS products for GM.

Lear Corporation (NYSE:LEA ) (Southfield, Michigan), which employs about 950 at its Janesville plant, is another large GM supplier that would suffer a big loss if GM closes. Lear Janesville makes seating components for the SUVs produced at GM Janesville.

Alliant Technology, a division of ATK Electrical Systems Company (NYSE:ATK ) (Edina, Minnesota), whether sensing impending closure or not, has already closed two Janesville plants and has moved some of its 640 employees (those who were willing to make the move) to an ATK plant in Rocket Center (Keyser), West Virginia, where it will make the fuses and sensors once made in Janesville. This is not ATK's only consolidation, though - Janesville makes the third of ATK's plants to be consolidated with Rocket Center.

General Motors continues to invest in several of its U.S. plants, as well as its Chinese, other Asian, and European plants, so things must not be as bad as they seem, over all. After all, though, union contract negotiations are coming up in the very near future, and the very real threat of massive plant closings and worker layoffs is a weapon large corporations don't often have at their disposal. Meanwhile, we wait for an announcement of exactly which plants GM plans to shut down. It follows, then, that their local suppliers will also close down, or be forced to get contracts from other OEMs, and quickly, before another GM shutdown. Industrialinfo.com will track and report on these shutdowns as they happen.

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