Chevrolet Sonic helps car industry shake off rust
DETROIT – When the word reached the Orion Assembly Plant, it spread along the assembly line like news of a death or natural disaster: General Motors, the biggest automaker in the world, had filed for bankruptcy protection.
On that grim day in 2009, Chevrolet and Pontiac sedans kept rolling down the line. And 1,700 worried workers stayed at their stations even as GM announced it would close the plant in a desperate bid to survive.
“The unknown was the scariest part,” recalled Gerald Lang, who had worked at Orion for two years. “We really had no clue what was going to happen.”
There was something else that the workers didn’t know: They were witnessing the opening act of one of the greatest recovery stories in American business.
Nearly four years later, Chevrolets are still moving down the assembly line. Lang and his co-workers now build the Sonic, the best-selling subcompact car in the nation. It’s a vehicle no one thought could be made profitably in the U.S., by a company that few people thought would last.
But GM has not only survived, it has earned $16 billion in profits in the past three years.
Detroit’s comeback is the work of many: President George W. Bush, who authorized the first bailout loans; President Barack Obama, who made more loans; workers who took lower wages and focused more on quality to compete with foreign rivals; and executives and designers who developed better cars.
There were victims: shareholders, auto-parts makers and other suppliers who went out of business, and taxpayers who will never get all their money back.
But there is no denying that American carmakers have made a remarkable recovery. Nearly 790,000 people now have jobs building cars, trucks and parts, up 27 percent from 2009. The story of the Sonic shows how they got there.
The collapse of the industry in 2008 nearly put GM and Chrysler out of business and cost Ford billions of dollars. As GM and Chrysler careened toward bankruptcy, President Bush stepped in, loaning them $17.4 billion. But sales remained in a free fall.
Orion Township’s chief executive, Matt Gibb, got a call from Ed Montgomery, President Obama’s auto-recovery czar, telling him the plant, the township’s largest employer, was on a secret list of GM factories to be closed.
GM, meanwhile, was drowning, even with loans from the government. On June 1, 2009, it became the largest American industrial company ever to file for Chapter 11 bankruptcy protection. As lawyers for GM and its creditors fought in court over scraps of the company, Orion’s second chance emerged.
In exchange for its $50 billion bailout, GM agreed to build a tiny car known as the Sonic at one of the U.S. plants it was closing. It chose the Orion factory. But the plant had to shut down for more than a year to be revamped.
There was another obstacle. GM and the United Auto Workers had to figure out how to cut labor costs at the plant.
GM couldn’t make money building the Sonic at Orion without an immediate influx of lower-wage workers. So the union and GM came up with an unprecedented solution: 40 percent of Orion workers would be paid in a new, lower wage structure, as opposed to a maximum of 25 percent at other factories.
Early in 2010, Americans began returning to car dealerships. Sales were nowhere near pre-recession levels, but they were enough for GM to celebrate its first quarterly profit in three years.
As winter ended, GM delivered on its promise to invest at Orion. Crates of robot arms, carts and conveyor parts arrived, filling what had been a vast open space just a few months earlier.
The first Sonic, a white hatchback, rolled out of the factory in August 2011.
GM is confident the Sonic will soon turn a profit, largely because workers at Orion keep finding ways to cut costs. A team in the body shop recently suggested a small fix in the plant’s machinery. It reduces the amount of steel going to the scrap heap.
“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.