Bid to build new GM small car heats up: Orion reportedly offers $44M
Towns in Tennessee, Michigan, and Wisconsin are all vying for a chance to keep their existing plants running by coming up with the most attractive package to woo assembly rights for a future unnamed General Motors small car. In the showdown, the first place plant will win the right to stay open, while the other two will be consigned to history. Last week, officials from Spring Hill, Tennessee said that The General was allegedly looking for over $200 million in upfront cash as part of any deal. The state of Michigan and the Michigan Economic Development Growth Authority isn't talking about their GM enticement package, but according to The Detroit News, Orion Township is reportedly chiming in with over $44 million in incentives. The package includes 100% tax free machining costs for up to 12 years, with overall tax forgiveness of $44 million.
The goal for Orion is to preserve the remaining $2.7 million in annual taxes it receives from the plant, along with the additional taxes it receives from the 3,400 employees that work, eat and in many cases live in the area. The township is also offering to build a water treatment facility on-site at the plant, saving GM about $1 million. GM would have to donate the land for the facility, but it would receive an additional tax credit for the appraised value of the land.
GM has said that it would announce the winning facility within the month. The plant is slated to build up to 160,000 vehicles per year and add up to 1,200 jobs.
[Source: Detroit News | Image: Bill Pugliano/Getty]
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Reader Comments (Page 1 of 1)
Rick C. 6:10PM (6/15/2009)
Why do I get the bad feeling this is going to get ugly? Almost on the brother against brother level to scrape up a few jobs?
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johnston b.l. 6:14PM (6/15/2009)
because desperate times leads people to commit desperate acts
Polly Prissy Pants 6:40PM (6/15/2009)
Yea, but there's something wrong with selling out your factory to the highest bidder. I know, capitalism, rah rah and all that, but it still reeks of graft to me.
why not the LS2LS7? 7:21PM (6/15/2009)
http://news.cnet.com/8301-13579_3-10251059-37.html
Only loser companies like Google and Apple go for tax breaks.
cdwrx 6:08PM (6/15/2009)
FWIW, they inexplicably pronounce it Or'-eeyun.
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why not the LS2LS7? 6:45PM (6/15/2009)
It sounds slightly less weird when you realize few ever say just "Or'-eeyun". The city is named "Lake Or'-eeyun", and the township is usually pronounced "Or'-eeyun Township" if it's ever spoken of at all.
cdwrx 6:52PM (6/15/2009)
True, slightly less weird. And it goes well with My'-luhn.
Aznauto 6:09PM (6/15/2009)
Better strategy would be build the car in a plant in China.
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Chris 12:54PM (6/17/2009)
And have more Americans unemployed? Dumb thing to say.
Chris 6:13PM (6/15/2009)
extortion at its finest
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DJ 6:31PM (6/15/2009)
But the bizarre twist here is that the Obama administration, which owns GM, is attempting to extort money from states and local governments! There have gotta be folks in the Chicago "machine" just in awe of what their protege has become.
cdwrx 6:53PM (6/15/2009)
Should GM be nice or profitable? You can have one or neither, but not both.
why not the LS2LS7? 7:18PM (6/15/2009)
DJ, by your argument, you are extorting money too, because you (and I) own GM. Shame on you!
Brian 12:17AM (6/16/2009)
DJ, A comment so idiotic is obviously not meant to be taken seriously. Hilarious.
UltimoDragon 10:32AM (6/16/2009)
@Chris: You need to can your silly 'extortion' claims. This is the same way the import brands built plants in the virtually union-free Deep South, with tax giveaways much larger than this one (considering the new plants had to be built from the ground up)--you know, those same makers building better vehicles that people want without the evil UAW?
It was good enough to snare Mercedes-Benz, Honda, Nissan, Toyota, and Hyundai into building plants in Alabama and Mississippi, but it's suddenly 'wrong' when GM is trying to do it to preserve or bring back jobs? What a joke.
why not the LS2LS7? 6:46PM (6/15/2009)
Don't do it GM. Be smart. Lake Orion has never been a great plant, and in a UAW stronghold, it never will be.
Spring Hill seems like a lot smarter idea.
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tuxchown 4:37PM (6/16/2009)
Give me a break. The UAW has no power whatsoever, as evidenced by the past few contracts, most notably the 2007 contract which did away with virtually every advancement the UAW has made in seventy years.
Racedriven 7:03PM (6/15/2009)
This whole this is ridious, the idea that a state has to come up with money up front to keep a plant open on an unknown car (let along any vehicle) and what happens if the unknown small car doesn't sell, then what? The plant closes again or what and what about the money up front, its gone?
What a way to a state thanks for the support, what's next, GM tells them...(insert word here)
GM should sell the other plants to an automaker that can make and sell cars and trucks without a catch (money up front) to the states, these states and employees deserve better.
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why not the LS2LS7? 7:18PM (6/15/2009)
They don't have to do it. But if they don't, they won't get the plant.
It's called competition, it happens all over the place. And all automakers (as all big businesses) go for incentives. Nissan got the land under their plant in Tennessee for free.
http://www.mercurynews.com/greenenergy/ci_10481210
'Reed said the city would sign a 40-year lease with Tesla and would provide the first 10 years rent-free. In years 11 to 20, Tesla will pay $1.5 million a year for the property, and then see rent increases of 2 percent a year in years 21 to 40. Tesla will pay the usual development fees, Reed said, but the city will look for a way to rebate them over time once tax revenues start flowing in from the company.'
'California actually will purchase the equipment for the assembly plant and lease it to Tesla, which will not have to pay sales tax on it once Tesla buys the equipment.'
So your last statement is purely theoretical. There is no such automaker who will make and sell cars there without a catch, because they don't have to.