Missouri act spurred GM's $380 million investment here, Nixon says

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Missouri act spurred GM's $380 million investment here, Nixon says
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GM announces $380 million investment at Wentzville assembly plant
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  • GM announces $380 million investment at Wentzville assembly plant
  • Wentzville General Motors plant
  • GM announces $380 million investment at Wentzville assembly plant
  • GM announces $380 million investment at Wentzville assembly plant

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WENTZVILLE • Just after the Missouri Legislature passed the Manufacturing Jobs Act in a special session last year, Gov. Jay Nixon received a phone call from Ed Whitacre, the then-chief executive of General Motors, offering his congratulations.

"I had a sense that would lead to really good news for us," Nixon said Thursday, recalling the phone conversation during a news conference in which GM executives announced details of a $380 million investment at the Wentzville assembly plant.

GM will build a half-million-square-foot addition to the 3.7 million square foot plant that currently makes only vans. The added space will make way for a new product — the re-engineered Chevrolet Colorado, a midsize pickup, company officials confirmed.

The new pickup will bring 1,260 jobs initially, which could grow based on truck sales. That's in addition to more than 400 jobs GM is adding early next year for a second shift for Chevrolet Express and GMC Savana van production. The plant, which opened in 1983, currently employs about 1,400 in a single shift.

The automaker hasn't disclosed when the Colorado will start rolling out of the Wentzville's assembly plant, but a United Auto Workers union official said it would happen in 2013.

As a result of the investment, GM also has been approved for $36.8 million over 10 years through the Manufacturing Jobs Act, which was the subject of Whitacre's phone call last year.

The Manufacturing Jobs Act allows automakers to retain withholding taxes on jobs that are retained in the state. The incentive for the entire program is capped at $15 million annually. Ford Motor Co. announced last month that it is tapping into the incentives for a $1.1 billion investment in its assembly plant in Claycomo, Mo.

Nixon, Missouri Department of Economic Development Director David Kerr and the governor's policy director, Jeff Harris, all traveled to Detroit in September 2010 to meet with Daniel Akerson, who succeeded Whitacre as GM's CEO, to make the case for investment in Wentzville.

"The legislation was a key deciding factor to get an investment of this size," Nixon told the Post-Dispatch.

GM also has applied for an unspecified amount of incentives through the state's Quality Jobs program, that's based on the number of jobs that are created and a state jobs training program.

This is in addition to the partial tax abatement the city of Wentzville approved for the expansion in September.

The new vehicle announcement came just weeks after the United Auto Workers union and GM approved a new four-year contract, which outlined the investment GM planned to make at plants across the country, including in Wentzville.

GM officials have kept quiet in recent weeks about what new vehicle was slated to be built in Wentzville. On Thursday, dozens of GM assembly workers crowded on the assembly plant floor, craning their necks to get a glimpse of a concept model — a pre-production version — of the new Colorado, which made its entrance through a blue curtain.

"It seems like something we've waited for, for a long time," said Wentzville plant manager John Dansby. In the U.S., Colorados are currently made in a Shreveport, La., facility that's slated to shut down in August 2012.

Union workers drew parallels between the Wentzville plant and the St. Louis Cardinals, who made a dramatic comeback to win the World Series.

Slumping van demand in recent years forced Wentzville's assembly plant to shrink to a single shift in August 2009.

"I believe we got the (Colorado) because the company wants every plant to be fully utilized with three shifts," said Mike Bullock, chairman of UAW Local 2250, which represents hourly workers at the Wentzville plant. "The Wentzville assembly plant is a lot like the Cards, we didn't give up either."

GROWTH POTENTIAL

After the plant expansion is completed, GM is targeting production of 135,000 Colorado pickups in the truck's first year. GM produced nearly 33,000 Colorado pickups this year through Oct. 29, according to Automotive News.

Cathy Clegg, GM's vice president of labor relations, said pricing and product specifications have not yet been determined for the next generation Colorado that will be sold in the U.S.

The new Colorado is based on a truck design developed by GM's Brazilian subsidiary. But the pickup will be tailored for the U.S. and other major markets.

The initial model GM launched in Thailand last month has so far been well received, she said.

"We've gotten really positive feedback," Clegg told the Post-Dispatch after the news conference.

GM is making a bet that there's opportunity to grow in the midsize pickup category, which saw lackluster sales over the past decade as many buyers opted for full-size trucks with bigger engines and towing capacity. Due to sagging sales, Ford ended production of its midsize Ranger pickup this year, and Chrysler stopped making the Ram Dakota in August.

GM and other domestic automakers invested heavily in improving fuel efficiency of its larger trucks, making them comparable in some cases to midsize trucks.

The next generation Colorado launched in Thailand has improved fuel efficiency compared to the current-generation Colorado, the company says.

"One reason the midsize market has stagnated is that a lot of attention hasn't been paid to it," said Jeremy Anwyl, chief executive of Edmunds.com, an automotive consumer research website based in Santa Monica, Calif. "The new Colorado is quite different than the current one, which went for over a decade without a redesign."

GM may be able to attract buyers looking for a midsize truck that significantly beats full-size trucks on gas mileage, he said.

"A lot of that demand depend on where fuel costs will be in the future," Anwyl said.

Copyright 2012 stltoday.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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