Wednesday, February 18, 2009

Some good news from Spring Hill, maybe: Chevy is one four brands that General Motors plans to keep

The New York Times reports tonight that Chevrolet is one of the four brands that General Motors plans to keep in its restructuring plan.

An initial glance, that could be good news for the company's Spring Hill, TN., plant since it makes Chevys after turning over the non-profitable Saturn brand to other plants a few years ago.

However, and there are a lot of "howevers" in situations such as these, car analysts say GM will need to reduce its number of brands more to ensure profitability -- such as with the Toyota operating model in America.

Chevy would surely be a survivor since it is the best selling brand for GM. But Chevy production has been a longer mainstay in other GM plants, not in Spring Hill.

And if the matter goes into bankruptcy, there will definitely be fewer Chevy producing plants than GM is wanting to keep. GM says it wants to close five U.S. plants.

For sure, bailout or bankruptcy, a bidding war will be unleashed as states and communities develop incentive packages to reduce operating costs at their respective plants -- particularly in Michigan.

Tennessee will be at a disadvantage with a $1 billion budget deficit. What it may ultimately offer GM of greatest value would be the support of its Sen. Bob Corker, who has been the national leader of the opposition to the bailout.

I don't believe Corker can be turned, particularly with GM asking for an incredible $30 billion -- $12 billion more than previously sought in December.

The people of Tennessee also are on his side, which may leave the Spring Hill plant with much less to offer a company on the edge of a financial abyss. And that definitely could be a deciding factor against it.

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