GM picks two Michigan plants to build fuel-efficient cars starting in 2011

General Motors Corp. said Friday that it had picked two Michigan plants to build a small, fuel-efficient car that it will begin making in 2011.

In doing so, GM will save the jobs of about 1,400 workers at an Orion Township, Mich., assembly plant and a Pontiac, Mich., sheet metal factory.

But the news was probably a death knell for two other domestic plants that the automaker had been considering.

One of those plants, in Spring Hill, Tenn., employs about 2,500 people.

Known as the original home of Saturn, it currently builds the Chevrolet Traverse crossover vehicle.

It will be idled in November.

The other plant, in Janesville, Wis., has been idled since December. It last built large sport-utility vehicles such as the Chevrolet Tahoe and Suburban and had 1,200 employees.

"Our work will not be complete until all of our members displaced by the shrinking auto industry are returned to work," said Cal Rapson, vice president of the United Auto Workers union and head of its GM negotiating team.

GM made the choice based on a series of criteria, including tax incentives and other enticements offered by the local and state governments.

Early this month, GM said it would decide between the three locations, setting off what amounted to an interstate bidding war.

"All three states really made very attractive offers," said Troy Clarke, GM's head of North American operations. "The folks in Michigan were very creative and brought us a package that makes this deal work."

Clarke declined to provide details of the specific incentives being offered.

He also did not identify the vehicle that would be produced by the Michigan plants, indicating only that it probably would be a successor to the current Chevrolet Aveo and Pontiac G3 models and that it would not be the Chevrolet Spark, which probably would be built overseas.

The Aveo and G3 cars are currently built in South Korea, Mexico and other international destinations and are relatively small sellers.

Through the first five months of this year, only 9,669 Aveos and 700 G3s have sold in the U.S., according to Autodata Corp.

Clarke said that GM expected the market for the new small vehicle to be roughly 100,000 per year, based on assumptions that gas prices will rise and that the new vehicle will be more appealing to consumers.

In addition, the plants could be utilized to produce a compact-size car such as the Chevrolet Cruze, a 40-mpg sedan due out next year, Clarke said.

GM will spend between $600 million and $800 million to retool the two facilities, which will have the capacity to produce 160,000 cars a year.

The announcement triggered jubilation in Michigan, which has suffered the closure ing of dozens of plants from the major U.S. manufacturers in recent years and has seen unemployment skyrocket as a result.

Both the Orion Township and the Pontiac plants had been scheduled for closure, as were more than a dozen other U.S. plants, as GM restructures.

The decision "is a show of faith and confidence that the people in our state are the best prepared to lead GM's turnaround," said Rep. John D. Dingell (D-Mich.), who cited the work of the state's political leadership in persuading the automaker to select the local plants.

For those in the other states, however, there was only bitterness and a notable sense of resentment.

Two weeks ago, Tennessee's governor complained that GM was uninterested in the tax incentives his state was offering, instead demanding up-front cash as part of a $200-million package.

A similar sentiment was heard in Wisconsin today.

"I do not believe that Michigan matched us," Gov. Jim Doyle said. "I certainly hope that we were not used to simply leverage more resources for Michigan."

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ken.bensinger@latimes.com

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