Auto factory towns prepare for what's next after closures
Detroit — There is life for sites of old auto assembly plants after they're sold — but rarely in the capacity for which they were built.
Lordstown Assembly, the 53-year-old General Motors Co. plant in northeast Ohio, will continue assembling vehicles under its new owner, electric vehicle start-up Lordstown Motors Co. But the story is different for many other plants. Most sit vacant for years before they are turned to rubble to make way for an industrial park, retail center or residential complex.
Through the years as competition has grabbed share of a challenging sedan market, Detroit automakers have had to cut production and close factories.
To reduce excess plant capacity, GM this fall negotiated with the United Auto Workers union to close its Lordstown plant; a transmission plant in Warren and another one near Baltimore; and a parts-processing plant in California. Ford Motor Co. negotiated the closure of its Romeo engine plant in southeastern Michigan.
The future of those plants, other than Lordstown, is uncertain.
Warren Mayor Jim Fouts hopes GM will "come up with a good, viable alternative" for Warren Transmission. "All is not lost," he said.
It was a shock to local communities when GM decided in November 2018 that it would idle the Warren, Baltimore and Lordstown plants — all casualties of a market transition away from cars to SUVs.
Lordstown built a small car, the Chevrolet Cruze, that was dumped because of slow sales.
The Warren plant, developed in 1941, manufactured six-speed transmissions mostly for cars that have been discontinued, including the hybrid Volt.
Baltimore Operations, opened in late 2000, produced transmissions for older versions of GM trucks before it closed. In 2013, GM had opened an addition to the plant for production of electric motors and drive units for the Spark EV — but that car, too, was terminated.
Detroit-Hamtramck Assembly was set to be closed after GM pulled the plug on the Chevrolet Impala and Cadillac CT6 sedans; instead, that plant will be resurrected for electric-vehicle assembly by the Detroit automaker.
"I think these types of things are a natural evolution of the business as they begin to tool up other engines and transmissions," said Matt DeLorenzo, senior managing editor for Kelley Blue Book.
DeLorenzo doesn't see the closures of the transmission and engine plants as direct results of the automakers' push toward an electric future — at least not yet. But at some point, when electric vehicles dominate their lineups, automakers will need fewer engines and transmissions.
"Even though there's been a lot of talk of a lot of EV models being introduced, the reality is they're only about 2% of the market," he said.
Preparing for change
All three Detroit automakers are gearing up to build electric trucks and SUVs.
Fiat Chrysler Automobiles is investing $2.5 billion in two plants on Detroit's east side to build next-generation Jeep SUVs and, eventually, electric vehicles.
In mid-December, Ford announced a $1.45 billion investment for two southeast Michigan manufacturing facilities to support Ford's EV and autonomous ventures: Ford will prepare Dearborn Truck to build new hybrid and fully electric 2020 F-150 pickups, and to assemble battery-cell packs. In addition, Ford will create a modification center at Michigan Assembly in Wayne to outfit autonomous vehicles.
Earlier this month, GM announced a joint venture with LG Chem to invest $2.3 billion in northeast Ohio for a battery-cell manufacturing plant. GM's $3 billion investment at Detroit-Hamtramck is expected to ready the plant for battery-powered trucks and SUVs, including Hummers, GMC Sierras and Cadillac Escalades.
"There's still going to be a demand for internal-combustion vehicles, and we are working hard to make sure they are more fuel-efficient," GM CEO and Chairman Mary Barra told reporters at the announcement of the Ohio battery-cell plant.
"I think it's going to be a transition over a period of time. There's still work to do in electric motors, in assembly of battery cells. We have a very capable workforce across the country, and we are going to be looking to optimize that. Our intent is to grow and lead in electric vehicles, which I think provides opportunities for all of those facilities."
Baltimore County, where Baltimore Operations is located, believes the site is "well-positioned" to stay in manufacturing, county spokesman Sean Naron said in a statement sent to The Detroit News.
"Years after its initial development, the plant remains a state-of-the-art advanced technology production facility," Naron said. "Our region also remains home to the large technical workforce needed to operate the site."
Fouts would like to see investment at Warren Transmission "that would guarantee that the plant would stay open for future uses."
While reinvestments by GM and Ford in Warren and Romeo is what Macomb County officials would most like to see happen, they realize closures could be an opportunity for more development in the area. In the past, they've turned away projects because they didn't have the industrial property available, said Vicky Rad, director of planning and economic development for the county.
"We are talking about two major assets in Macomb County …," Rad said. "It creates an opportunity to market them."
Redevelopment takes years
The process of getting the properties to market is likely to take time. GM's former Janesville Assembly plant in Wisconsin sold eight years after production stopped in 2009. The automaker wasn't permitted to sell the plant right away; it went on standby mode until GM's 2015 labor contract with the UAW contract approved the closure.
When GM finally sold the 250-acre Janesville site to St. Louis-based Commercial Development Co., one local commercial real estate agent became a conduit between the company and the community.
"We made sure we gathered up some community leaders and talked about the plant ... and helped them to understand this isn’t just some 250-acre hunk of dirt on the south side of town. It’s much more that," said Bill Mears, broker and owner of Coldwell Banker Commercial McGuire Mears & Associates in Janesville.
The plant has been torn down, the site cleared and Mears' firm is now marketing it for industrial use. Mears calls the site "an instant industrial park" because of its access to rail, a route to the expressway and infrastructure in the ground to support it.
"It’s just an ideal location for certain types of industries," Mears said.
Janesville struggled with the loss of the GM plant. For 90 years, it had been a place where generation after generation went to make a living.
"Our Janesville citizenry is a bit sentimental. It was difficult to see the plant torn down, but from a city perspective, we see this as a positive development," said Gale Price, economic development director for the city. "In the end, we want to see jobs back on the property employing people."
Another former GM plant in Sleepy Hollow, New York, is taking on a new life, but it took years. GM stopped production at the facility in 1996 and Diversified Realty Investors of New Jersey and SunCal of California purchased the property in 2014 for redevelopment. The site will have residential units, retail space, including an urban market and cinema, hotel, office space and 45 acres of public open space, according to Diversified's website.
Another former GM plant in Moraine, Ohio, was repurposed by Chinese company Fuyao Glass America, an auto glass manufacturer. Fuyao's takeover of the plant — and its clashes with an American workforce accustomed to higher wages and union support — is featured in the Netflix documentary, "American Factory." The documentary is a deep dive into how culture divides affect the workforce, working environment and the company's profitability.
Plant closures, though difficult, are "at times necessary to remain a competitive and viable company in our global industry," GM Spokesman Dan Flores said. "GM strives to find unique ways to reuse properties so they once again become active productive elements of a community. "
Mears' advice for communities going through what Janesville did: "Be prepared for the long haul."