Extracted from Shreveport Times
Investment creates new vehicles, new jobs, high expectations
David Westerfield The Times
Posted on October 5, 2003
Robots weld a fender pieces.
The 2004 Colorado and Canyon pickups will carry the weight of a billion dollars in their beds when the new trucks go into full production this week on General Motors' new 2.9-million-square-foot plant west of Shreveport.
"This is the single biggest investment in any manufacturing complex we have made in recent history - by far," said GM spokesman Dan Flores.
"We're investing about $1 billion and that's a big vote of confidence in Shreveport. We have great expectations. There's a lot at stake here."
The Chevrolet Colorado and GMC Canyon shift into high gear this week with the official start of production of the midsize pickups. The launch has created 1,200 new jobs with GM suppliers, generated national attention for Shreveport and opened the way for a future vehicle - the Hummer H3, according to many reports.
Success is critical for GM, fighting intense competition from U.S. and foreign automakers during a time when incentives and rebates have cut into profits. In turn, GM's success is critical to Shreveport. With 2,500 employees and a total annual payroll of $160 million, the GM plant is by far the region's largest manufacturing operation. It's also the state's only auto plant.
"General Motors' investment and supplier construction is a huge investment that equals jobs, housing, sales tax and growth in our population. That's a windfall for Shreveport and North Louisiana," said Mayor Keith Hightower.
"Plants are closing around the country and we are adding on. That's attributable to our work force and their productivity. And we hope there will be more good news in the future."
That good news could be a vehicle that would draw international attention: the Hummer H3. General Motors has made no official announcement about the H3, but numerous local and national sources indicate the sport utility vehicle will be built in Shreveport - and soon.
When and if that happens, the region could gain at least another 500 jobs.
Like a first date
The focus today, though, is on the Colorado and Canyon - two "heart of the market" pickups that go straight to the heart of the intensely competitive battle waged between domestic and foreign automakers. The trucks, ranging in price from about $16,000 to nearly $28,000, should show up in the nation's 4,184 Chevrolet dealerships and 2,525 GMC dealerships before the end of the year.
Chevrolet spokesman Tom Wilkinson compares the launch of a new vehicle to a first date. "You want to make a good first impression," he said.
"The launch is critical. It's hard to recover, to get any momentum, if you have problems. But we have a lot of confidence and great potential for a solid launch."
Chevrolet, in particular, is staging an aggressive battle to sell more vehicles. The midsize pickup is one of nine new vehicles coming out in the next 18 months for Chevrolet in an effort to boost the brand's annual sales over three million vehicles. Last year, Chevrolet sold 2.6 million vehicles.
"The Colorado is one of the most important. Chevrolet is synonymous with pickups and the level of competition is intense. We are looking to bring some heat to the midsize market," Wilkinson said.
"It's a tough business. No one will give us an inch, and we won't give them an inch either. We want to have a hit, and we are working hard to do that."
The competition is both American (Ford Ranger and Dodge Dakota) and foreign (Toyota Tacoma and Nissan Frontier). Those trucks should get upgrades within two years, when another key competitor could enter the midsize market for the first time - Honda.
"We pride ourselves on having the best truck lineup in the industry. This is an opportunity for us to capture younger customers and bring them into GM," Flores said.
"The Nissans and Toyotas of the world are working hard to take our customers. It's a big challenge for Shreveport, but Shreveport has always built a high quality product and we have tremendous employees there who take the business personally. Our challenge is to make things better and more efficiently."
Balancing the dollars
Using 0-percent financing and rebate offers taking as much as $4,000 off the price of a vehicle, General Motors has fought hard to maintain its market share this year. In August, when GM's share held firm at 28.5 percent, the market share for The Big Three (GM, Ford and Chrysler) fell to an all-time low of 57.9 percent. Market share has fallen steadily for GM for the past 25 years, down from a high of 46 percent in 1978.
At the same time, GM is also working to control expenses like health-care costs, which hit $4.5 billion last year for 1.2 million employees, retirees and dependents. Pension costs are just as high: GM paid $4.6 billion to retirees and surviving spouses last year. Net income in 2002 was $1.7 billion on sales and revenues of $186.8 billion.
The automakers just negotiated new agreements with United Auto Workers for more than 630,000 hourly workers, including 115,000 at GM. Cost savings are also coming through cutbacks. Just four years ago, GM's hourly employment stood near 140,000.
The new union contract reflects the industry's tough times: Union negotiators completed their work in relatively rapid style, even though the agreements with the Big Three include plant closings and job cuts.
Employment levels are expected to remain steady in Shreveport and will likely grow if GM does move forward with the H3. GM has yet to say what will become of the original plant it opened here in 1981.
Incentives have helped to a small degree. GM has been talking with the governor's office about new tax incentives for a new truck line at the plant. Also this year, the state expanded the property tax exemption to make it a 100 percent exemption when a company creates at least 500 new jobs and spends at least $50 million. Helping suppliers: The state's tax credit for automotive manufacturers has been doubled to $5,000 per job created.
Workers hold the key
Flores said GM's primary investment in Shreveport is not in a new plant, but in the workers who operate it.
"The key is not technology - the key is people. The whole focus of our Global Manufacturing System is not rocket science," he said.
"It's a commitment to put the assembly line worker in position to build the highest quality product in the most effective manner possible."
Eighteen suppliers, providing everything from instrument panels to wheels, have located around the plant and hired nearly 1,200 people to support the plant. Parts are shipped on a "just-in-time" basis, helping to reduce storage costs and control quality by having the source of those parts only a short distance away.
The quest to improve quality - which GM has been doing in recent years, according to reports from J.D. Power and Associates - is a never-ending one, Flores said.
"It's a marathon without a finish line."
Plant Manager David Gibbons said he is confident in his workers as well as the new pickups, although there is an element of risk with any new product.
"We are increasing worker responsibility and going to smaller teams. There are state-of-the-art conveyor systems with a better environment and better lighting," he said.
"We have a tremendous opportunity to see a long future in Shreveport. The key is how well the market is received. We believe we have a great success story. Our expectation is to grow our business and increase market share."
Jacques Lasseigne, regional manager for the state's Office of Workforce Development, said GM's expansion in Shreveport came at an opportune time for the community.
Suppliers have hired assembly, clerical, purchasing, shipping and other workers for their Shreveport operations. Starting pay typically ranges from $9 to $12 an hour, he said.
"To get those jobs at any time would be great, but it's really good for us now because they offset some losses, like those at General Electric. The trend in manufacturing is to go overseas, so this is a big coup for us," Lasseigne said.
"And if we get the H3, that would be another huge boost for us. We have a large base of people here who have been in manufacturing. And we got a lot of calls from people who had left the area for a manufacturing job and wanted to come back."