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GM Outlines Plan for New Plants

January 11, 1999

DETROIT (AP) _ A top General Motors Corp. executive outlined a plan Monday to replace some of the automaker’s unprofitable assembly plants with more efficient ones as a way to stay in the small-car business.

Vice President Mark Hogan said the plan, called Project Yellowstone, would result in smaller plants that use so-called modular assembly methods, which would reduce labor costs and allow the automaker’s manufacturing to be more flexible.

GM is looking at replacing aging plants in Lordstown, Ohio and Lansing _ which may be replaced with two separate plants. The automaker already has given the go-ahead to redesign its newer small-car plant in Ingersoll, Ontario, which GM operates with Suzuki Motor Corp. of Japan.

The plants are expected to dramatically reduce GM’s costs by giving independent suppliers a larger role in designing and assembling parts for the cars and requiring far fewer workers to create the finished product.

If Project Yellowstone is successful with its small-car factories, GM plans to expand the plant format to other North American assembly plants.

GM stock shot up $6.06 1/4 to $86.12 1/2 a share late Monday on the New York Stock Exchange, in part because of reports of the company’s strong earnings outlook for 1999.

GM maintains it makes no money on its small cars, losing more than $1,000 on some models. After his speech to the Automotive News World Congress, Hogan told reporters that even GM’s previously successful Saturn unit was losing money.

Hogan said that ``stark reality″ meant GM’s next generation of small cars being designed now ``may be our last opportunity to remain in this segment.″

In his speech, Hogan acknowledged that GM will have to make major changes to its manufacturing culture and relationship with its union workers. He said he’s optimistic the automaker will reach agreement with the United Auto Workers within 60-90 days to clear the way for the new plants.

``For this to work, we need to have the active support and strong mutual understanding of what it will take with UAW leadership and the membership they represent,″ Hogan said. ``As we learned this summer, we are all in this together and our survival and prosperity are clearly linked.″

Last summer’s UAW strikes at two GM parts factories were a low point for GM-UAW relations. The strikes ended in August with a promise by both sides to improve their relationship going into next summer’s triennial national contract talks.

Since then, top GM and UAW leaders have been meeting regularly. A group of UAW staffers recently went on a GM tour of its modular assembly plant in Brazil.

In Lansing, UAW Local 602 members authorized their leaders Sunday to negotiate a new local contract with GM. ``By this unanimous vote, our members send a message that they understand the world is changing,″ local President Garry Bernath told the Lansing State Journal.

``People are looking at this positively,″ Local 602 member Sam Warren told the newspaper. ``We have faith that this will all work out for us.″

Hogan said GM wants to give its workers greater say in the design and assembly processes. But the automaker also wants fewer union job classifications, which limit the kinds of tasks each worker can do, and more ``multifunction″ jobs.

The new plants’ benefits to workers will include less repetitiveness of tasks, because workers will rotate jobs every two hours; greater safety through elimination of fork lifts; more conveniently located rest rooms, cafeterias and parking lots; and improved ergonomics, Hogan says.

``If we come together in agreement with our union partners, we hope to have a groundbreaking for a Yellowstone plant in the U.S. in the not-to-distant future,″ Hogan said.

Hogan also said GM is negotiating with city officials in Lansing and Lordstown about terms for building the new plants. He said the automaker had a good relationship with both cities.

Hogan said no layoffs were planned at the new plants; lower staffing will be achieved through attrition. With the average age of a GM assembly worker at 47, the automaker expects to lose a large number of workers through retirement in the next few years.

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