Tiny Chevrolet Sonic helps Detroit shake off rust
GM is confident the Sonic will soon turn a profit, largely because workers at Orion keep finding ways to cut costs. Earlier this year, a team in the body shop suggested a small fix in the plant’s machinery. It ensures that the car’s frame fits together correctly every time and reduces the amount of steel going to the scrap heap, saving money.
‘‘We recognize that we've got to work together as partners, because we’re going to succeed or fail together,’’ Orion Plant Manager Steve Brock said.
Even the wage differences don’t seem to be a big source of friction. Tammy Ballard, who makes the lower wage that is now $16.66 per hour, said workers don’t ask each other about pay. She left an auto-parts company for greater job security at GM.
‘‘I knew what I was coming into, and I'm satisfied with that,’’ she said.
On her purple T-shirt is Orion’s slogan: ‘‘We build it like we own it.’’
Two months after the plant reopened, Obama and South Korean President Lee Myung-bak visited to celebrate a new free trade agreement. It was a little over 27 years since President Ronald Reagan had spoken at the plant’s dedication. Obama trumpeted his familiar campaign theme about saving thousands of jobs.
It was an emotional moment for Dunn, who shook the president’s hand.
‘‘I was taught in my household that you take care of the people that take care of you,’’ he said. ‘‘That man took care of me.’’
By the time Obama visited, GM had reported its sixth straight quarterly profit and repaid some of its government loans in cash and with a public stock offering. The government still owns 19 percent of the company and is still roughly $22 billion in the hole on its $49.5 billion bailout of GM.
To the smaller companies near the Orion plant, GM’s survival was huge relief.
Applied Manufacturing Technologies, which programs Orion’s robots, made it through the downturn by diversifying into the food processing, glass and solar energy businesses. GM is still its largest customer.
‘‘The turnaround is shocking, how fast and strong it is,’’ said Applied Manufacturing founder Mike Jacobs.
CAN IT LAST?
Detroit has seen many booms and busts in a century of auto making. There were 41 car companies in the city in 1913. Almost all failed or were consolidated into the Big Three. Chrysler nearly went bankrupt in 1980 before being rescued by the government. Sales ebb and flow with the economy, gas prices and even the weather.
But industry experts say things have changed. The reforms Detroit undertook make it less prone to financial disaster. Car companies have closed plants, laid off workers and sold or closed entire brands. GM now has 12 U.S. assembly plants and 101,000 employees in North America. A decade ago, it had 22 plants and 202,000 employees.
‘‘You literally can’t do as many bad things because of the smaller workforce and the smaller portfolio of plants,’’ said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. ‘‘The vulnerability to stupid things is not as great as it used to be.’’
Detroit is finally doing many things right. GM, Ford and Chrysler are all building vehicles like the Sonic that can be sold globally, saving billions that used to be spent developing cars for individual markets. Because they are no longer overproducing cars and trucks, they can command higher prices.
And they’re no longer blindly chasing market share as they did in the early 2000s, when GM executives wore buttons that said ‘‘29’’ because their goal was to grab 29 percent of U.S. sales. It didn’t work. GM currently is making money with about 18 percent of the market. U.S. auto sales rose 13 percent last year to 14.5 million, the best in five years.
‘‘Market share is nice, but profits are essential,’’ Cole said. ‘‘That’s going to live with us for a long, long time.’’
Reuss, GM’s North American president, said the company is less bureaucratic. Employees can make decisions without taking everything to the top.
‘‘We have a lot of smart people here. If they’re so afraid and paralyzed that every decision comes to me or someone else, it’s not very productive,’’ he said.
The government also is getting out of GM’s business, which should help sales. Late last year, GM bought back 200 million of the government’s shares. That leaves taxpayers holding 300 million shares, which the Treasury plans to sell by early 2014.
Detroit could still stumble. GM’s inventory is high and its U.S. sales aren’t keeping pace with growth in the overall market. The industry is so competitive that cars can quickly get stale if companies don’t invest in them. Growth could be hindered by the lack of available engineering talent or a lack of parts suppliers, many of whom closed during the recession.Continued...