July 17, 2009 at 12:17 pm

GM picks Downriver for battery factory

Brownstown plant to make power packs for electric vehicles

General Motors Co. is expected to open a $43 million lithium-ion battery plant in a Brownstown Township industrial park that will supply a key component of the Chevrolet Volt extended-range electric vehicle, The Detroit News has learned.

Sources familiar with the negotiations said GM has selected the site alongside Interstate 75 and is planning a public event as early as next month to announce the development.

The battery plant would create almost 600 jobs and be GM's second multimillion dollar investment in the state when combined with the automaker's decision last month to invest up to $800 million building a new small car at its Orion Township plant.

The Brownstown plant is a major piece of GM's plan to develop more fuel-efficient vehicles that cut demand for foreign oil and would be the first assembly facility of its kind in the U.S. operated by a major automaker.

Brownstown Township, a Downriver community 14 miles southwest of Detroit, has approved a 50 percent tax break on new machinery and equipment for up to 12 years -- a deal worth several million dollars. The incentives must be approved by the state.

GM is looking at a site in the 370-acre Brownstown Business Center industrial park, which is between Sibley and King roads east of Interstate 75, said Joe DiSanto the township's economic development manager.

GM spokeswoman Sherrie Childers Arb couldn't confirm the location of the plant Thursday.

"We're still working on the business case," she said.

The site is minutes from Willow Run and Detroit Metropolitan airports, where lithium-ion battery cells could be delivered from Korea.

From there, the battery cells could be assembled into T-shaped packs at the Brownstown plant and hauled to GM's Detroit-Hamtramck assembly plant, where the Volt will be built.

"We're excited. We think we're the logical choice because we're used to growth and fast-tracking projects and working with businesses," DiSanto said.

Brownstown is one of the fastest-growing communities in southeastern Michigan. From 2000-08, the township gained 6,664 residents, the fifth-largest increase behind Macomb, Canton, Chesterfield and Shelby townships, according to the Southeast Michigan Council of Governments and U.S. Census Bureau.

The tax incentive package, approved March 2, is based on GM installing about $31 million worth of new equipment, DiSanto said. GM has said the facility would be the size of a small engine plant. As part of the assembly process, it would also feature a "clean room environment."

Members of Michigan's congressional delegation are aware of GM's strong interest in locating the battery plant in Brownstown Township, but noted that an announcement had been tentatively planned earlier, only to be cancelled. Michigan's delegation has been aggressively pushing to get GM to commit to more employment in Michigan.

The state is dangling millions for the battery plant, which is expected to create 571 new jobs -- including 140 workers who would be employed directly by GM.

In February, the state approved giving GM $167 million in tax credits to build the plant in Michigan.

The state's Economic Growth Authority also has approved a state tax credit worth $6.8 million.

GM could be eligible for federal funding for the plant under two separate programs.

In February, Congress approved a $787 billion stimulus bill that includes $2 billion in advanced battery grants. GM also is eligible for loans under the Energy Department's $25 billion retooling program, which helps automakers offset costs needed to build more fuel-efficient vehicles.

GM announced during the North American International Auto show in January that it planned to open the plant, but declined to say where.

The Brownstown site makes sense logistically because of the proximity to highways, airports, the Detroit-Hamtramck plant and Flint, where the Volt's engines will be produced, said auto analyst Jim Hall of 2953 Analytics LLP.

"The critical issue: 'Is it big enough to take care of the initial production and ramped-up production as time goes on?' " Hall said. "If (the plant) can't be expanded, they would have to put a second plant on line. It all depends on how many cars they think they're going to sell."

GM's plans call for first-year production of about 10,000 Volts.

Township officials last met with GM executives before the automaker filed Chapter 11 bankruptcy on June 1. But last week, a federal judge approved the sale of GM's best assets to a new government-sponsored company. Township officials hope to receive official confirmation from GM soon.

"We have a lot to offer," township Trustee Michael Eberth said. "We have facilities ready to be moved into. They just move their equipment in and start the business in a great location."

The battery packs will be supplied initially by a company called Compact Power Inc., which is the North American subsidiary of lithium-ion battery maker LG Chem of Korea.

The Volt, expected to hit showrooms late next year, will rely on lithium-ion batteries and feature a gasoline engine to extend the range of the batteries from 40 miles to about 400 miles.

LG Chem will continue to provide the cells, with capacity in Korea to make 40 million units a month.

The plan is to eventually manufacture cells in the U.S.

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