GM - MORE STRONG ARMING

This town and County put out a lot to get GM to build their Saturn Plant there back in 1985.

GM pulled Saturn out and spent 600 million last year to retool it to make the Chevy Traverse. Now they are trying to extort "Hundreds of Millions" for them to stay and use the plant.

According to this article, the Federal government is willing to flip the bill if they move it to Michigan.

It is sad no matter which plants get shut down. But I can't believe that GM, the UAW, and the Federal Government are trying to extort money from the State.


Union leader says governor must protect GM jobs

By CHRIS GRAHAM and SKYLER SWISHER/Staff writers

Gov. Phil Bredesen needs to keep General Motors in Middle Tennessee “at all costs,” a top union official says.

“It’s definitely a high-stakes negotiation under way,” said UAW Local 1853 Bargaining Chairman Mike Herron. “We’ve worked too closely with the governor to have him abandon us now.”

On Thursday, Bredesen said in a press conference to reporters that GM officials are asking for an up front payment of at least a “couple hundred million dollars” to bring small car production to the Volunteer State — a price the governor believes Tennessee simply can’t afford.

The Spring Hill GM auto manufacturing facility is one of three plants vying for the rights to produce a small car that GM had once planned to build in China. The plants in Orion Township, Mich., and Janesville, Wis., are also under consideration.

Herron said he had been told the decision would be based on which plant would be able to produce a car at the lowest cost possible.

“This plant can build anything GM wants it to build,” Herron said. “I thought that would work in our favor.”

Now the Spring Hill factory’s future could hinge on how much in incentives the governor is willing to offer.

GM Chief Executive Officer Fritz Henderson has said the pick for small car production will be based on “12 objective criteria,” though they have not been made public. Bredesen said he didn’t think the other 11 criteria would have much affect on the final decision.

Bredesen said the company is interested in “how big of a check” the state is willing to write.


“The only thing they want to know is how much cash are you going to put in up front — we don’t care about tax credits, we don’t care about those other things,” the governor said of GM Thursday. “They’re just asking us to help them build the plant.”

Now, there is speculation that the three states contending for the small car plant could get involved in a bidding war. Governor’s offices in Michigan and Wisconsin did not respond to requests for comment.

The Detroit Free Press reported Saturday, that the federal government is backing about $2 billion in loans for Michigan and said some of the money could be used to redevelop auto factories, including the Orion Township facility.

Herron pointed to other deals Bredesen has landed in the past, including the new $1 billion Volkswagen AG plant in Chattanooga and the relocation of Nissan Motor Corp.’s North American headquarters to Franklin.

“I know that the governor is a business person, first and foremost,” Herron said. “I don’t think the governor of the state will leave us high and dry. I think he’s going to do all that he can do.”

Herron said he and the 2,900 employees at the Spring Hill auto plant are nervously awaiting a decision by GM officials that may come as early as the end of June.

For now, workers at the plant are on an eight-week break this summer, and production of the Chevrolet Traverse — the assembly plant’s only product — will resume production in late July or August. The vehicle will then shift to Michigan later this year, and the Spring Hill plant will idle in November.

“We hope at the end of the day we get support from the state of Tennessee,” Herron said. “We’ve been fortunate in the past to have support from these leaders, and I expect that we will have the continued support from the government in the future.”

Waymon Hickman, the First Farmers & Merchants Bank chairman and CEO who was instrumental in bringing the former Saturn plant to Spring Hill in the 1980s, said he was surprised GM is asking for such a substantial amount of money.

But Hickman said he’s optimistic Bredesen will be able to get small-car production in Spring Hill.

“It would cost less for us to make a transition than the other two plants in the mix,” he said.

HISTORY OF INCENTIVES

Maury County has a history of providing incentives to entice GM to do business in Tennessee. In 1985, local leaders approved a 40-year tax abatement package.

Supporters of the agreement said the measure was needed to generate economic development and would be offset by job gains in the area. The county estimated GM would invest $3.5 billion to build and equip the facility, “resulting in significantly increased employment opportunities for the citizens of Maury County,” according to the 1985 resolution.

Hickman said the county gave up little compared to its competitors. In addition to the tax abatement, GM requested assistance building water lines, establishing interstate access and money to help train workers.

“Lots of communities were giving them the keys to the vault,” said Hickman.

The agreement also had its opponents, which included one of GM’s fiercest critics.

During a 1985 speech at Columbia State Community College, Ralph Nader, a consumer advocate and author of “Unsafe at Any Speed,” blasted local officials for agreeing to the corporation’s demands. He said GM “virtually copped out of its obligation to pay its fair share” and called the tax incentive package an example of the corporation’s “unbridled greed.”

“They sensed the community was willing to give and was fearful, so they drove the bargain,” he said.

Nader estimated the agreement would result in $65 million in lost tax revenue during the first 10 years alone.

Under the initial in-lieu-of-tax agreement, Saturn paid $7.5 million to the county the first year, $3.5 million annually for the next two years, $3 million in 1995 and then a varying percentage of the assessed rate until 2025.

During the last year of the agreement in 2025, GM would only be required to pay 40 percent of the standard tax.

When the plant was without a product and in jeopardy of closing in 2006, the county sweetened the deal by agreeing to drop a decade-long dispute over how the plant is assessed for tax purposes. The county agreed to assess the plant at $35 per square foot for parts of the facility being used to manufacture automotive-related products and $20 per square foot for portions of the plant not manufacturing products.

Officials agreed to settle the dispute even though an administrative law judge sided with the county’s argument that the assessment should be much higher, which would result in GM paying more to the county.

In the revised accord, GM agreed to a minimum annual payment of $2.25 million for 2006-2010 provided that the factory is being “operated as an automotive assembly plant.”

GM subsequently invested more than $700 million into the plant to enable it to manufacture the Chevrolet Traverse. The state committed more than $35 million in funds to retrain workers for the overhaul.

Tax assessor Jim Dooley said the county will receive less money in lieu of taxes if GM ceases production of cars in Spring Hill. He said there are too many variables to calculate how much the Spring Hill plant would pay if it does not secure a new product.