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GM Now Says It Plans to Build a Small Car in U.S.

Bowing to UAW pressure over planned Asian imports, the company will reopen an as yet unnamed plant.

by on May.29, 2009

Chevrolet announced production plans for a new vehicle - the Chevrolet Spark - a fuel-efficient mini-car based on the Beat concept that will arrive in dealer showrooms in 2011.

Chevrolet announced production plans in January for a new vehicle - the Chevrolet Spark - a fuel-efficient mini-car based on the Beat concept that will arrive in dealer showrooms in 2011.

General Motors Corporation announced today that it plans to build a future small car in the United States in an idled UAW-GM plant. The unnamed small car will be built in an unnamed facility. 

By making the announcement today, GM is clearly bowing to pressure from the United Auto Workers Union, and also trying to smooth the way in Congress for a bankruptcy filing that is expected to come this Monday.

U.S. taxpayers will own 72.5% of a New GM. Importing cars from Korea, China or Japan – all closed markets  to U.S. autos – with taxpayer dollars is politically controversial, to understate the issue facing the Obama Administration.

The United Autoworkers Union on May 18 sent a letter to members of the U.S. Congress objecting to the centerpiece of GM’s Viability plan – closing 16 plants in the U.S. and importing vehicles from low-wage, non-unionized countries.

The factory closings were not new, they have been in various versions of the plan since GM went to the U.S. government for bridge loans late, last year, but in bringing the argument over the closings public, the union was attempting to prevent some of them through political pressure after apparently being shut down at the bargaining table.

The strategy worked. About 1,200 UAW jobs will be saved,  although more than 20,000 UAW jobs are eliminated in the current version of GM’s viability plan.

“Small cars represent one of the fastest growing segments in both the U.S. and around the world,” said Fritz Henderson, General Motors President and CEO. “We believe this car will be a winner with our current and future customers in the U.S.”    

The vehicle adds to GM’s growing portfolio of U.S.-built, highly fuel efficient cars including the Chevrolet Cruze and Volt, according to Henderson. Small car sales have been declining in the U.S. during 2009 as fuel prices dropped.

The re-tooled plant will be capable of building 160,000 cars annually, which can be a combination of both small and compact vehicles. Selection of the site will be determined in the future. Whether the cars built in the U.S. can be exported to overseas markets remains to be seen.

“I would like to personally thank the UAW for agreeing to work with us to ensure our overall manufacturing competitiveness in the United States,” said Henderson. “This vehicle segment, while important today and expected to be more so in the future, is extremely challenging. It takes a special effort by everyone to bring a domestically produced small car to market in a cost-competitive and profitable way – but that is what we are going to do together.” 

GM said it already has a strong manufacturing presence in the United States. Currently, about 67% of GM cars and trucks sold in the U.S. are built in the U.S. With this announcement, GM claims that U.S. production levels will increase beyond 70% by 2013, keeping it the largest manufacturer of vehicles in the U.S.

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