DETROIT — In the wake of General Motors filing for Chapter 11 bankruptcy protection on Monday, the company has announced plans to close or place on standby several of its manufacturing and distribution facilities. Most notable was the company’s announcement that it will cease operations December 31 at three of its parts distribution centers located in Boston; Columbus, Ohio; and Jacksonville, Fla.
As a result of lower demand and the inevitable reduction of the company’s size, GM will also close several manufacturing facilities over the next 2 years. Assembly plants in Wilmington, Del., and Pontiac, Mich., will both be closed by the fall, and plants in Pontiac, Mich., and Spring Hill, Tenn., will both be put on standby capacity in September and November, respectively.
Several stamping plants will also be shuttered. This month will see the previously announced closing of a Grand Rapids, Mich., plant, followed by the Mansfield, Ohio, plant in June 2010 and the Indianapolis plant in December 2011. The Pontiac, Mich., stamping plant will be put on standby capacity in December 2010.
Finally, five manufacturing plants for powertrain components will close in 2010, including the company’s engine plant in Livonia, Mich. The other facilities are located in Flint and Willow Run, Mich; Parma, Ohio; and Fredericksburg, Va. A castings plant located in Massena, N.Y. closed last month.
“In general terms, it’s a situation that has been a long time in the making,” says Cameron McCausland, director of brokerage services and principal with the Southfield, Mich., office of Colliers International.
The Midwest auto industry has been struggling for years, McCausland adds, and many people saw bankruptcy as the inevitable conclusion for at least one of the automakers. The closing of these large industrial facilities is going to put a strain on their respective markets, and McCausland believes that it may be hard to fill them with new tenants.
“When you’re the largest automaker in the world, and you don’t need the facilities, who else does,” he says.
While the short-term impact will consist of increased vacancies and lower rents, McCausland believes that reorganization will ultimately be the best thing for General Motors. The company will now be able to rid itself of extraneous divisions and properties, which will give it a better chance to become profitable again. Once that happens, the company will once again be able to expand into new facilities and increase production.
“Although, in the short-run this will possibly be painful, it’s a new day [for GM.] It’s a new start going forward,” McCausland says.
— Coleman Wood