Shrinking SUV demand dooms West Michigan GM plant

October 19, 2008
| By Pete Daly |
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Even as the General Motors stamping plant in Wyoming — apparently the last GM plant in West Michigan — begins its final year of production, a vacant auto plant in the region that was once part of GM is being eyed by potential buyers.

Employees at the GM plant on 36th Street in Wyoming, which began producing panels, fenders and other sheet metal parts in 1936, were advised by the company last week that the facility will be closed by the end of next year.

A GM spokesperson said lower demand for large pickups and SUVs, coupled with the distance between the Wyoming plant and GM plants it supplies, led to the "difficult decision" to phase out production there over the next year.

Chris Lee, a GM spokesperson in Warren, Mich., said approximately 1,340 UAW employees and about 180 salaried employees will be affected.

Lee said that more than 40 percent of the Wyoming plant's production "is associated with parts for full-sized pickups, full-sized SUVs and mid-sized SUVs, which have been the hardest hit segments in terms of shrinking market demand." GM management announced in June it would be closing some of those assembly plants and consolidating stamping operations.

He said GM is working on a leaner organization with a "regional contiguous footprint," to reduce inventory in the shipping "pipeline" and the cost of shipping.

A longer shipping pipeline requires more inventory moving through it and more containers for moving those parts. Those factors are affected by the distance between a plant and the other plants it supplies.

"With Grand Rapids being over on the west side of the state, that was a factor," said Lee.

Lee said the decision to close the Wyoming plant did not reflect any problems whatsoever with the work force or the quality of the production there.

When asked if the 36th Street plant was the last GM plant in West Michigan, Lee said he was not aware of any other GM assembly or stamping plants in West Michigan. There had been a GM plant in Coopersville, which was built in 1980 but became part of Delphi Automotive Systems when that company was spun off from GM in 1999. Delphi declared bankruptcy in 2005 and the Coopersville plant, which employed more than 600, was closed completely in early 2007. Some of its manufacturing equipment was then shipped to the Delphi plant in Wyoming, which is still operating.

Coopersville City Manager Steven R. Patrick said, "There have been parties interested in the (vacant Delphi plant there). … Currently, there are a couple of businesses that appear very serious about purchasing that facility."

Patrick said it is possible that in the "next three to six months, there might be some positive news. There's no guarantee but it looks more positive than not."

Ken Rizzio of the Ottawa County Economic Development office said he and representatives from the Michigan Economic Development Corp. have had talks with the interested parties. While neither he nor Patrick could discuss any details about the potential buyers, Rizzio said he is hopeful there may be some good news "before the end of the year." But he cautioned that Delphi is still in the bankruptcy process, which adds obstacles to sale of the property.

Rizzio said the vacant Delphi plant in Coopersville is 257,000 square feet on a large parcel of land — 128 acres — that would give a new owner plenty of room for expansion.

Bob Frain, tax assessor for the city of Coopersville since 1979, said the closing of the Delphi plant "really hurt the area here" through the loss of tax revenue.

Patrick said that when Delphi Corp. announced its impending bankruptcy in 2005, the plant in Coopersville generated "probably 25 percent" or more of Coopersville tax revenues. However, only a very small percent of the employees at the plant actually lived in Coopersville, and when the plant closed, there was not a major impact on retail businesses in the area.

Patrick said since the Delphi plant closed, Coopersville continues to grow "although at a much smaller rate than it used to."

He attributes at least part of that to the psychological impact of a large, silent factory building surrounded by an empty parking lot with weeds growing in the cracks.

"When people drive by and they see a facility that has no cars parked in the parking lot, the perception is that the city isn't healthy," he said. "Despite what you do to dispel that belief, the day that you start to fill that parking lot with cars and employees coming back to the plant, that's when the perception changes, and people will once again feel the community is moving forward."

Wyoming city officials were as surprised as the workers when a GM executive appeared at the 36th street plant Monday and announced it would be closing in 2009.

"GM was our highest taxpayer, so we'll see a hit to our tax base that is significant. We figure the loss is about a million dollars in tax revenue to the city," said Wyoming City Manager Curtis Holt. He estimated that would be roughly about 7 or 8 percent of its total revenue.

While the largest employer in Wyoming is now Metro Health hospital, the largest taxpayers are the GM plant, then the Delphi plant, and then Gordon Foods.

The GM stamping plant is roughly 2 million square feet on a 92-acre parcel.

Birgit Klohs, president of The Right Place Inc. economic development organization in Grand Rapids, said the GM plant is "world class" from an infrastructure standpoint: a very large industrial facility with rail and other logistical connections.

"Clearly there won't be hundreds of potential new users, but we are going to have to look at a plan over the next weeks and months on what other users there are globally for a facility of that magnitude," she said.

"We're going into brainstorming mode of what's beyond General Motors," she added.

GM North America production in the third-quarter was down 10 percent compared with a year ago, according to the corporate Web site. They are predicting fourth-quarter production will be about 16 percent below the same quarter last year.

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