Friday, January 30, 2009

Low Voltage

"The bad news just keeps on coming for General Motors and Flint, Michigan. It was reported late last night that construction contracts for the new $370 million engine plant that was going up in Flint have been canceled. GM actually stopped work on the project in early December. The plant was to produce the new 1.4-liter four cylinder engine for the 2011 Chevy Cruze and Volt. GM spokeswoman Sharon Basel told AutoblogGreen that the intention all along had been for engines for the early production runs of the Cruze and Volt to be supplied from a European facility that already builds variants of GM's so-called "Family 0" powertrains. The Flint plant would not have been ready for start of production of Cruze next spring."


1 comment:

  1. Unless the plans have been changed in the meantime, on January 12 and in an updated version on January 13there was an article in the Flint Journal announcing that the range-extending engine for the Volt and the engine for the Cruze will both be built at the GM powertrain plant in Vienna/Aspern, Austria. GM claims it will have no effect on the retail cost of the cars when they are imported back, which in all honesty I find very difficult to believe for a number of reasons, not the least of which are the current euro/dollar exchange rate and extremely high cost of personnel in Austria (which is not noticeable in their salaries, however). I am not sure what all of GM management's arguments are, but at the plant in Vienna all the necessary infrastructure and equipment appear to be in place, so location/relocation costs, building and/or retooling would not be a major cost factor as it would be in Flint. This means GM's spring target to begin manufacture will not be a problem. Another thing that just occurred to me, though this may or may not have anything to do with it: due to the automotive crisis in general the plant in Vienna just reduced the working hours of 1540 of its 1850 employees from January until May. This will save them another bundle.

    That said, it all seems rather short-sighted and is yet another missed opportunity for Flint: GM wants to get the cars on the market ASAP, but who's going to buy them in the US? Out-of-work GM employees? Why not get people back to work so they have an opportunity to start putting some cash back into the system? Or am I just a moron when it comes to basic economics? What on earth are they doing with that bailout money anyway? Saving it for a rainy day? It's really angering.

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