BREAKING: GM cancels contracts for Cruze/Volt engine plant
by Sam Abuelsamid on Jan 28th 2009 at 9:27AM 
2011 Chevy Cruze and its new 1.4L Turbo engine
The bad news just keeps on coming for General Motors and Flint, Michigan. It was reported late last night that construction contracts for the new $370 million engine plant that was going up in Flint have been canceled. GM actually stopped work on the project in early December. The plant was to produce the new 1.4-liter four cylinder engine for the 2011 Chevy Cruze and Volt. GM spokeswoman Sharon Basel told AutoblogGreen that the intention all along had been for engines for the early production runs of the Cruze and Volt to be supplied from a European facility that already builds variants of GM's so-called "Family 0" powertrains. The Flint plant would not have been ready for start of production of Cruze next spring.
With the continuing financial crisis and weak sales, GM's European factory has enough capacity to supply Cruze and Volt for a time so that the automaker can conserve capital. The timing of construction was reaching a point where GM would have had to commit to spending millions of additional dollars that it doesn't have right now. Therefore, the company has opted to cancel the contracts and put the plant on hold until the situation improves. In the meantime, both vehicle programs are still on schedule and otherwise unaffected by these moves.
Reader Comments (Page 1 of 4)
Losty 9:31AM (1/28/2009)
O No! We suck again!!!
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JDMlover 9:55AM (1/28/2009)
Again? ummm when did they stop....
But seriously i had enough of the so called "Volt". Its nothing more then pics and specs.
The Pruis is here and it's now. The Volt will never replace the Pruis at this rate...not that it will replace it at all.
What happened to bail out money? What the heck was that for if they cant even get this car off the ground.....their so call "Halo" car that will save them can't even see production...what hope does that leave for the anything else.
Something is SERIOUSLY going wrong at GM headquarters.
sydtron 10:03AM (1/28/2009)
The "Problem" at GM headquarters (and almost every other automaker right now, in terms of % drop) is that they have enough factories to spit out 9-10 million vehicles a year and now they can only sell 6-7 million, if that. Why build new factories when others are being idled due to lack of sales?
oZ 10:23AM (1/28/2009)
JDMlover: It's 'Prius', and the Volt is a completely different standpoint on hybrid technology than the Prius is. So, no, it's not here now. You have something, but it's not the Volt. Turns out Chevy and Saturn already have something similar to the Prius, only without the undeserved sense of elitism. The thing that you and countless others seem to miss is that the mules are out and the powertrain works. People haven driven in it. People, even certain people who blog on this site, trash the Chrysler EVs for the same thing, but journalists have driven those, too, and they are real. Maybe they're just bitter that they haven't been able to yet.
Losty 10:25AM (1/28/2009)
It really bugs me that every one thinks Flint is just one F'ing place on a map like Hiroshima. just destroy it and move on. Ask your self a question. Have you ever lived in flint. If you answered yes your input is valuable and insightful having first hand living in what it's like. If you answered NO, please keep your comments about how bad it is, or how much it is just a hole to you self. This town has people who have every right to leave when they feel like. I left and I came back I very much love this town. I understand, Yes it is in the crapper as far as an economic prosperity goes. It is trying to change it's image and appearance to be more inviting as a college town, as much as I think our mayor is as dirty as a meth head after 3 weeks without a shower. I believe he or the other people who run this city are trying to change which is better than what I can say about some of the other places I have lived.
Julius 9:31AM (1/28/2009)
No surprise, companies are hunkering down in a crappy sales environment. Hopefully, the imported engines will be enough.
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mapoftazifosho 9:37AM (1/28/2009)
I have this odd feeling that the imported engines will be more than enough for current demand.
Flint sucks, I really don't understand why they would build something new there.
Flint and MOST of Detroit just needs to be bulldozed. That should be a part of Obama's stimulus package, hell, give Caterpillar the contract to build a city destroyer...
elprogramer 2:20PM (1/28/2009)
^Well screw you too.
I was going to work at that new plant...
MemphisNET 9:35AM (1/28/2009)
Bad news indeed. On one hand, we'll still see the cars - on the other, all those potential jobs are gone, so who's going to buy the product?
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Kaptain75329 9:49AM (1/28/2009)
I would imagine the same people who are planning to buy either one anyway.
Where the car and it's components are built doesn't matter to me - the issues are that of the car meeting my expectations for quality/fit & finish, and my needs with regard to performance, cost of ownership, and feature content. I'm not exactly in the minority on this point.
Polly Prissy Pants 3:12PM (1/28/2009)
"Where the car and it's components are built doesn't matter to me"
It matters to me, and it matters to more and more people every day. We gave GM our tax dollars because they said it would save American jobs, now we see them canceling an American plant and instead importing the part from overseas. How about they take my tax money and build the American plant, sell the foreign one and export the engines to other countries? If my money is just going to fill their executive pockets and employ non-US workers then I want it back.
Sea Urchin 9:41AM (1/28/2009)
Would anyone really be surprised if GM will say they will not build Cruze or the Volt?
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Gary 9:44AM (1/28/2009)
I don't think so.
zamafir 10:02AM (1/28/2009)
Cruze? Yes, it's a car they need to build, they need cheaper cars with decent margin.
Volt? No. Not at all. Most non GM fanbois have been leaning towards vapor since it's introduction. In terms of a business case, it doesn't make sense to bring a $40,000 unproven bit of tech to market, esp when you don't have the right brand name to simply back it up (toyota could do it under lexus because they started the rabid hybrid phenomenon). If it's not brought to fruition though, it'll be a waste of close to $1,000,000,000 in terms of the R&D GM's burning through for it. Which also, wouldn't come as any surprise.
If the Volt and Cruze don't make it GM will really need new management to get the company back on viable terms (if, indeed, that's possible).
MTU 5.0 10:06AM (1/28/2009)
What do you think they will move forward with, more body on frame SUVs?
I would put the Cruze at about a 95% go and the Volt at about 60-70%, so yes, I would be surprised if they didn't build them. And if the EPA allows California to set fuel mileage requirements (which will set a de facto standard for the rest of us), these may be part of the volume leaders for GM (well, at least the Cruze).
Sea Urchin 10:38AM (1/28/2009)
Zamafir, i really think that Cruze arguably speaking is the MOST important vehicle in GMs history. It needs to be executed correctly.
JAL 9:42AM (1/28/2009)
From the desk of the Flint Mayor:
OK plan B, Lets rebuild Autoworld, thats gotta work.
The Michigan motto: Get up, dust yourself off, move on only to get kicked in the nuts again.
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sk 9:43AM (1/28/2009)
with US$ exchange rates sliding, this engine can become very expensive to import. GM would have been better of to invest in building it in MI.
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Krystian 9:45AM (1/28/2009)
Not neccesarily, GM could have hedged the exchange rate, still making it far more profitable than building a factory in Flint.
mapoftazifosho 9:53AM (1/28/2009)
Unless you have some proprietary information on GM's financial analysis of this situation, you're just some schmoe that thinks he knows better. Thanks for your priceless insight...