GM to Build Equinox SUVs in Reopened Former Saturn Plant

(Updates with closing share price in 11th paragraph.)

Nov. 21 (Bloomberg) -- General Motors Co., 28 months after its U.S.-backed bankruptcy, said it will build Chevrolet Equinox sport-utility vehicles in a reopened Tennessee assembly plant that used to make cars for the now-defunct Saturn brand.

GM will invest $61 million and add 685 hourly and salaried workers as output at the factory resumes in 2012’s second half, the Detroit-based automaker said today in a statement. GM will spend an additional $183 million and add about 1,200 more jobs to make “midsized vehicles” for the 2015 model year that the company will name later, said Cathy Clegg, GM’s vice president of labor relations.

“Our No. 1 priority in auto negotiations this year was jobs,” Bob King, president of the United Auto Workers, said in the statement. Joe Ashton, vice president of the Detroit-based union’s GM department, has said getting work for the Tennessee plant was one of the union’s main objectives in contract talks with the automaker that concluded in September.

The UAW has said that GM, the largest U.S. automaker, will add or retain 6,400 jobs and invest $2.5 billion in its plants as part of their four-year contract ratified by members Sept. 28.

GM will use the Spring Hill plant to build a “variety” of vehicles off of different base architectures, Clegg told workers today at the factory.

“The flex operation can change products frequently based on what we need to do in the market,” Clegg said. GM may be able to add production of a model that’s selling well in as little as four to six months, she said.

The additional Equinox production will supplement output from GM’s CAMI Automotive plant in Ingersoll, Ontario, and a factory in Oshawa, Ontario. There is “no impact” to production from those operations for “the foreseeable future,” Clegg said today on a conference call with reporters.

GM idled its assembly plant in Spring Hill, about 35 miles (56 kilometers) south of Nashville, in November 2009, when it was making Chevrolet Traverse SUVs. The factory made GM’s first Saturn, a red SL sedan, in July 1990, according to the company’s website.

Saturn and the Tennessee plant had been championed by former Chief Executive Officer Roger Smith as GM’s way to profitably build small cars. The brand evolved into an experiment in marketing, where dealers offered “no-haggle” pricing. Saturn owners formed clubs to celebrate the small car. Smith died in 2007 at age 82.

GM shuttered Saturn, Hummer and Pontiac and sold Saab as it pared U.S. brands to four from eight as part of its $50 billion government rescue and 2009 bankruptcy. The automaker has said its new labor contract will cost $215 million over the next three years as it raises wages for entry-level employees and buys out some of its most expensive laborers.

GM fell 2.9 percent to $21.05 at the close in New York. The shares have plunged 43 percent this year.

Labor costs will rise 1 percent a year during GM’s contract with the UAW, the smallest increase in a contract in four decades, the company has said.

The Spring Hill plant will reopen as part of an “innovative staffing and operating agreement” that allows GM to build different vehicles on several platforms, Dan Ammann, the company’s chief financial officer, said in a Sept. 28 conference call with analysts. Clegg didn’t elaborate on the staffing agreement today at the plant.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net;

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

Source: http://www.businessweek.com