State, city, union coax GM to stay Plant is worth $1 billion a year to area economy

3,100 workers anxious

Key is where company decides to build new van

Auto industry

July 12, 1998|By Ted Shelsby | Ted Shelsby,SUN STAFF

For years, General Motors Corp.'s van assembly plant in Baltimore has been considered an essential economic catalyst. With 3,100 workers, it is the city's largest manufacturer and, coupled with a network of suppliers, adds more than $1 billion a year to the region's economy.

What is unclear is for how much longer it will remain a key part of the region's industrial base.

Well aware of the plant's importance, state, city and union officials are gearing up their efforts in hopes of persuading GM to continue its 63-year history with the city.

"Everyone is prepared to fight tooth and nail for the future of the Broening Highway plant," Gov. Parris N. Glendening said. "It is tremendously important to Maryland's economy."

The local plant's future has been up in the air since the early 1990s, when the company revealed plans for a redesigned midsize van to replace the Chevrolet Astro and GMC Safari. At the time, GM said "Baltimore is high on the list of contenders" to build the new van, but it added that other sites were being considered.

There has been speculation that the new vehicle might be made in another country.

At one point, GM intended to announce the production site so that the new van could be in the showrooms in 2000 or 2001. But the company has delayed introduction of the van and put off the decision on where it will be built.

The latest thinking is that GM will extend the Astro and Safari into the 2004 model year and make a decision on where the replacement vehicle will be built in the next two to three years, according to Sen. Barbara A. Mikulski, who has had discussion with top GM executives.

"I don't think GM is evading a decision," said the Maryland Democrat. "I think the market is shifting under them and they need time to know where they are going in terms of their corporate structure."

General Motors is facing the decision while it is under intense pressure. Its market share has dropped to about 30 percent from 50 percent in the late 1960s, and it is in a head-to-head fight with Ford Motor Co. In addition, GM's work force needs to be cut by as much as 50,000, according to some estimates. It is producing too many models, and the company's cost per vehicle is higher than its competitors'.

Compounding GM's problems, the new models it has introduced in recent years generally have not been as well received by the public as hoped for, said David Healy, an automotive analyst with Burnham Securities.

While the No. 1 automaker looks at closing plants and shrinking its U.S. operations, it has its eyes on other parts of the world for expansion. John F. Smith Jr., GM's chairman, president and chief executive, recently talked about plans for new vehicle assembly plants in Brazil, China, Poland, Argentina and Thailand.

All of those issues are expected to be considered while GM tries to decide the fate of the Baltimore plant.

Retaining the plant "is a top priority of the state," Glendening said.

"I want to reiterate that the state of Maryland is prepared to work with you so that the Baltimore plant can a remain a competitive and profitable part of General Motors," the governor wrote to Smith late last year.

Last month, Glendening spoke with G. Richard Wagoner Jr., president of GM's North American operations. He informed the company that the state is prepared not only to expedite the permit process to speed construction of a new plant or to retool the existing one, but also to offer financial incentives.

Such a deal could be similar to the one given to Bethlehem Steel Corp. last year to locate a $300 million cold-rolling mill complex at its Sparrows Point plant. That package included $67.2 million in grants and low-interest loans, and Baltimore Gas and Electric Co. agreed to build a $2 million substation adjacent to the cold mill and to provide rate reductions worth $4 million over the next decade.

Glendening said that keeping the plant "viable and keeping the jobs in Maryland must be one of the top priorities of state government, as well as our federal partners."

Michael A. Conte, an economist at Towson University, estimates that the GM plant and its local suppliers contribute about $336 million a year to Maryland's personal disposable income.

It is estimated that for every 100 GM workers, there are about 175 other people who depend on the plant for work, he said.

UAW Local 239, which represents the 3,000 hourly workers at the plant, is leading the fight to save the plant.

"We're trying to make this plant as competitive as possible," said Charles R. Alfred, president of the union local.

Labor, management meeting

Union leaders have been meeting with plant officials to review the UAW's 1996 local contract. They are examining the contract "line by line, looking for fat and trying to trim it out," Alfred said.

"This is over and above the contract agreement," he said, and the intent is make the Baltimore plant exemplary in productivity.

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