How The Chevy Sonic Became Best Seller

DETROIT - When the word reached the Orion Assembly Plant, it spread along the serpentine assembly line like news of a death or natural disaster: General Motors, the biggest automaker in the world, had filed for bankruptcy protection.

On that grim day in 2009, Chevrolet and Pontiac sedans kept rolling down the line. And 1,700 worried workers stayed at their stations even as GM announced it would close the plant in a desperate bid to survive.

"The unknown was the scariest part," recalled Gerald Lang, who had worked at Orion for two years installing dashboards and doors. "We really had no clue what was going to happen."

There was something else that the workers didn't know: They were witnessing the opening act of one of the greatest recovery stories in American business.

Nearly four years later, Chevrolets are still moving down the assembly line under the plant's 82-acre roof. Lang and his co-workers now build the Sonic, the best-selling subcompact car in the nation. It's a vehicle no one thought could be made profitably in the U.S., by a company that few people thought would last.

But GM has not only survived, it has earned $16 billion in profits in the past three years. And the industry is on track to make this year its best year since 2007.

Detroit's improbable comeback is the work of many: President George W. Bush, who authorized the first bailout loans; President Barack Obama, who made more loans; workers who took lower wages and focused more on quality to compete with foreign rivals; and executives and designers who developed better cars.

To be sure, there were victims: shareholders, auto-parts makers and other suppliers who went out of business, as well as taxpayers who will never get all their money back.

But there is no denying that American car-makers have made a remarkable recovery. Nearly 790,000 people now have jobs building cars, trucks and parts, up 27 percent from the dark days of 2009.

The story of the Sonic shows how the industry, along with a community in a downtrodden state, got there.

The downward spiral

The collapse of the industry in 2008 that nearly put GM and Chrysler out of business and cost Ford billions of dollars came from a perfect storm that included the Great Recession, expensive gasoline and the financial meltdown that dried up funding for car loans.

At the Orion plant, the recession had slowed sales of the midsized Pontiac G6 and Chevrolet Malibu cars that were made there. In February 2009, the company eliminated a shift and laid off 400 workers. The outlook darkened even more when GM announced it would dump the Pontiac brand. Since the G6 made up half of Orion's production, workers feared the plant was doomed.

It didn't take long for issues inside the plant to ripple outside to the surrounding concrete industrial parks. Dozens of auto-parts companies laid off workers. At Casey's Chicken, a barbecue joint in a nearby strip mall, a healthy side business catering GM birthday and retirement parties dried up.

About that time, Orion Township's chief executive, Matt Gibb, got a call from Ed Montgomery, President Obama's auto-recovery czar, telling him the plant was on a secret list of GM factories to be closed. The factory was the township's largest employer and taxpayer. About a third of its 35,000 residents work for GM, Chrysler or parts suppliers.

In exchange for its $50 billion bailout, the government got a 60 percent stake in the company and GM agreed to build a tiny car known as the Sonic at one of the U.S. plants it was closing. Small-car production had long been relegated to other countries where wages weren't as high. But GM couldn't take government money and build a small car overseas.

For folks in Orion like Dunn and Pat Sweeney, the local union president, the mission was clear: Get the Sonic.

First, they met with Michigan Gov. Jennifer Granholm and other state officials, who promised GM a $779 million, 20-year tax credit.

Gibb spent all spring organizing petition drives and thinking of ways to cut the plant's costs. So when an army of GM lawyers and tax experts showed up at his office, he was ready with a generous package of tax incentives. The township also promised a new $4.5 million water-storage tower and pledged to buy water at off-peak hours so GM could get lower rates.

The tax abatement cost the township and its schools about $780,000 per year, but Gibb said it was worth it to save the plant's roughly 3,600 jobs. If the plant closed, he estimated that half of the area's commercial properties would be vacant within two years. Plus, the township was competing with Janesville and Spring Hill, Tenn., which had a newer factory than Orion.

At the end of June, GM made up its mind: The Orion factory would get the small car. But there was a catch. The plant had to shut down for more than a year to be revamped - a closure that would further threaten businesses in a fragile economy.

Dunn watched as workers removed the plant's equipment, knowing GM could pull out of the deal at any time.

"You could see from one end to the other," he said. "There was nothing in there but cement and pillars.