GM investing $600 million to improve Fairfax plant in KCK
01/29/2013 10:29 PM
05/16/2014 8:56 PM
When GM’s chairman and CEO walked into the Fairfax plant on Monday, he got his first look at the place that makes the car he uses, a Buick LaCrosse.
“That’s the one I drive in Detroit as a company car, and I own one. And I get to choose anything,” Daniel Akerson said.
Akerson also came with a gift, announcing that General Motors will invest $600 million in the plant. The automaker will use the money to build and equip a 450,000-square-foot paint shop and upgrade the plant’s stamping press, among other improvements.
The investment, according to the company, ranks among the largest it has ever made in an existing plant. It will account for 40 percent of the $1.5 billion that GM plans to invest this year in its North American plants.
“This company is coming out of the gate,” Akerson said in an interview with The Star. He said the improvements would make Fairfax a “crown jewel of our manufacturing universe.”
The investment is not expected to add jobs but is instead GM’s affirmation of a future for the plant and its workforce of 3,900 hourly and salaried employees. Akerson said the current paint shop is nearing the end of its useful life. Not replacing it would have condemned Fairfax to obsolescence.
“We would not invest $600 million in a plant that we didn’t think would be here for a long time,” he said. “This is a statement of permanence.”
The investment is significantly higher than the $120 million in industrial revenue bonds that the Unified Government of Wyandotte County and Kansas City, Kan., had approved last summer for the project.
Mayor Joe Reardon, who in 2009 was worried that the plant would close because of GM’s bankruptcy, knew that the automaker would spend much more on the plant but just not how much until the $600 million figure was announced.
“It’s a great day for Kansas City, Kansas, to know we will retain Fairfax for the long haul,” Reardon said.
The $600 million puts the Fairfax plant on sure footing along with Ford Motor Co.’s Claycomo plant. Last year Ford completed a $1.1 billion stamping plant at Claycomo to make metal body parts for the Transit Connect. Claycomo is slated to start building the commercial van later this year.
GM’s investment also ranks among the largest of any kind made recently in the area. The huge new Honeywell complex, which will make parts for nuclear weapons, will cost $1 billion to build and equip. The Kauffman Center for the Performing Arts, completed in 2011, cost $400 million.
The Fairfax announcement comes at a crucial time for GM as it moves from a fight for survival to rebuilding itself and improving the vehicles it sells. The company was in a financial mess in 2009, when a government-managed bankruptcy and bailout saved it from insolvency. Critics questioned whether the bailout would fix the automaker’s problems.
On Monday, some supporters of the bailout couldn’t resist saying that it had worked and that a major industrial company had been saved. One result, they said, was that Fairfax remained a place for workers to earn enough to be part of the middle class.
“This is important not just for this state but for the country,” said Joe Ashton, a national vice president for the United Auto Workers, who spoke Monday at Fairfax. “The middle class is what made this country.”
Gov. Sam Brownback told the roughly 500 GM employees and local and state officials who gathered Monday at the plant that the investment was a wonderful announcement.
“Manufacturing is coming back in the U.S.,” said Brownback, a Republican. “We build great things in Kansas, and with GM’s commitment, it means we will continue to do so.”
GM, the second-largest automaker behind Toyota, has had 11 consecutive profitable quarters. Quickening the cadence of improvements, GM this year will unveil redesigns or upgrades to about 70 percent of its vehicles. The Buick LaCrosse is set for a major upgrade, and the Chevrolet Malibu, also made at Fairfax, will be refreshed with styling changes inspired by the new Chevy Impala.
The new paint shop will use 50 percent less energy per vehicle and more environmentally friendly paint. Instead of fans that blow heated air to dry the paint, the new shop will use radiant tubes patented by GM. One process will improve a vehicle’s coating to prevent rust.
Akerson said such improvements were part of GM’s efforts to make better cars and light trucks.
“We don’t want to be competitive. We want to be great,” he said.
In 2012, GM’s global sales rose about 3 percent, and Chevrolet sold a record number of vehicles. The federal government, which invested about $50 billion to help save the company, has said it will sell its remaining stake in the company within 14 months.
But the turnaround is a work in progress. The 17.9 percent share of the U.S. market that GM snagged last year was its smallest in decades. And Fairfax idled production of the Malibu in December because of ballooning stockpiles.
Akerson said the company has changed in many ways from the old GM. It now pays executive bonuses based partly on the quality of the cars produced. Labor relations also have improved, and the UAW made many contributions, including in 2011, when it agreed that GM’s hourly employees would not get pay raises in return for profit sharing.
Akerson is known as a tough executive who speaks his mind. He once called the Toyota Prius a “geek-mobile.” In his remarks Monday at Fairfax, he noted that the Kansas City Chiefs will get the first pick in this year’s NFL Draft.
“You need it,” he said.
Akerson concluded by saying that if GM executes its plans flawlessly, it would become the world’s most valuable automaker, would be recognized as a great place to work and have loyal and enthusiastic owners, and that would “make GM great once again.”
“Let’s make this our legacy.”