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Tiny Chevrolet Sonic helps Detroit shake off rust

Published on NewsOK Modified: January 5, 2013 at 9:18 am •  Published: January 5, 2013
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"We all sort of wanted to do something that was very radical that would test those relationships and also test our ability to be really competitive here," said Mark Reuss, GM's North America president.

Union leaders Sweeney and Dunn accepted the deal in October 2010, figuring it was better to have lower-paying jobs than none at all. They were vilified by some workers.

"People like to complain, but I think deep down inside, they realize what we had to do and why we did it and how everybody's truly benefiting," Dunn said. "It's better than having the doors closed and wondering where your next paycheck is coming from."

After the wage deal, GM started moving equipment into Orion. But there were still no workers to support the restaurants and shops surrounding the plant.

By early 2010, some of the small businesses around Casey's Chicken had started to close. Engineers who had been laid off by nearby parts suppliers came in asking to work for owner Casey Barnard for $8 an hour.

Meanwhile, plant workers were struggling. Unemployment benefits and a subsidy from GM that provided up to 70 percent of their pay began to run out. Some took jobs at other GM plants in Ohio or Missouri, where they bunked with fellow workers in crowded apartments or trailers and commuted home on weekends.

At the UAW hall, meetings had standing-room only crowds of 500 and lasted for hours. Workers stepped up to the microphone asking for help because their homes were being foreclosed and their cars repossessed.

"That was really crushing, going through that time," Dunn said. "These people had been working and making their payments all along on time and then the economy just dropped out on them."

Workers started trickling back to the plant in November 2010. But it wasn't enough for Casey's Chicken. After 14 years, the restaurant closed in the fall of 2011. Barnard is now working at a vacuum store a few doors from his former restaurant.

"I put every dime I had into keeping the business alive, but it came to a point where I couldn't afford it. I spent the college fund and everything in the bank," he said. "I had a passion for it, loved it. But you see that wall coming at you, and you know you're going to get crushed."

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THE COMEBACK BEGINS

Early in 2010, Americans began returning to car dealerships as the economy improved. Sales were nowhere near pre-recession levels, but they were enough for GM to celebrate its first quarterly profit in three years.

As a dreadful winter ended, GM delivered on its promise to invest at Orion. Crates of robot arms, carts and conveyor parts arrived, filling the vast open space that had frightened Dunn just a few months earlier.

By midyear, Lang, the assembly line worker, got an offer from GM to move 160 miles away to Lordstown, Ohio, to work on the Chevrolet Cruze. By then, it was clear Orion would reopen to build the Sonic, and there were hopes of getting another car, the compact Buick Verano.

Lang and his wife had saved some money and decided to stay in Michigan, foregoing GM pay and benefits until he was called back to work at his home plant. By summer of 2011, he was back on the job testing the assembly line.

"Pack your lunchbox and head off to work. That's a great feeling," he said.

Gradually, all the older workers who wanted to return to the plant were hired back at the same pay as when they left. New workers were added at the lower wage, adding up to 1,800 on two shifts.

The first Sonic, a white hatchback, rolled out of the Orion factory in August 2011.

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SONIC BOOM

Even when their company was in bankruptcy, GM engineers and designers across the world never stopped working on the Sonic, a new mini car that would take on the Honda Fit and Toyota Yaris. The Sonic was part of a wave of small cars from Detroit that came with more than just good gas mileage and a lower price: They had aggressive styling, better handling and more amenities like leather seats and navigation systems.

At GM's expansive technical center, 30 miles south of Orion, engineers worked to make the Sonic accelerate faster and ride quieter than the Aveo, its cheap South Korea-built predecessor. The Sonic emerged with hatchback and four-door versions. It came in eight colors, including bright orange, and it got up to 40 mpg on the highway.

The car hit showrooms with a sticker price of just under $14,000 — $1,300 less than the Fit. A year later, the tiny Chevy was the best-selling subcompact in the country. Last year, GM sold more than 81,000 Sonics. Hyundai's Accent finished second at 61,000.

GM is confident the Sonic will soon turn a profit, largely because workers at Orion keep finding ways to cut costs. Earlier this year, a team in the body shop suggested a small fix in the plant's machinery. It ensures that the car's frame fits together correctly every time and reduces the amount of steel going to the scrap heap, saving money.

"We recognize that we've got to work together as partners, because we're going to succeed or fail together," Orion Plant Manager Steve Brock said.

Even the wage differences don't seem to be a big source of friction. Tammy Ballard, who makes the lower wage that is now $16.66 per hour, said workers don't ask each other about pay. She left an auto-parts company for greater job security at GM.

"I knew what I was coming into, and I'm satisfied with that," she said.

On her purple T-shirt is Orion's slogan: "We build it like we own it."

Two months after the plant reopened, Obama and South Korean President Lee Myung-bak visited to celebrate a new free trade agreement. It was a little over 27 years since President Ronald Reagan had spoken at the plant's dedication. Obama trumpeted his familiar campaign theme about saving thousands of jobs.

It was an emotional moment for Dunn, who shook the president's hand.

"I was taught in my household that you take care of the people that take care of you," he said. "That man took care of me."

By the time Obama visited, GM had reported its sixth straight quarterly profit and repaid some of its government loans in cash and with a public stock offering. The government still owns 19 percent of the company and is still roughly $22 billion in the hole on its $49.5 billion bailout of GM.

To the smaller companies near the Orion plant, GM's survival was huge relief.

Applied Manufacturing Technologies, which programs Orion's robots, made it through the downturn by diversifying into the food processing, glass and solar energy businesses. GM is still its largest customer.

"The turnaround is shocking, how fast and strong it is," said Applied Manufacturing founder Mike Jacobs.

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CAN IT LAST?

Detroit has seen many booms and busts in a century of auto making. There were 41 car companies in the city in 1913. Almost all failed or were consolidated into the Big Three. Chrysler nearly went bankrupt in 1980 before being rescued by the government. Sales ebb and flow with the economy, gas prices and even the weather.

But industry experts say things have changed. The reforms Detroit undertook make it less prone to financial disaster. Car companies have closed plants, laid off workers and sold or closed entire brands. GM now has 12 U.S. assembly plants and 101,000 employees in North America. A decade ago, it had 22 plants and 202,000 employees.

"You literally can't do as many bad things because of the smaller workforce and the smaller portfolio of plants," said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. "The vulnerability to stupid things is not as great as it used to be."

Detroit is finally doing many things right. GM, Ford and Chrysler are all building vehicles like the Sonic that can be sold globally, saving billions that used to be spent developing cars for individual markets. Because they are no longer overproducing cars and trucks, they can command higher prices.

And they're no longer blindly chasing market share as they did in the early 2000s, when GM executives wore buttons that said "29" because their goal was to grab 29 percent of U.S. sales. It didn't work. GM currently is making money with about 18 percent of the market. U.S. auto sales rose 13 percent last year to 14.5 million, the best in five years.

"Market share is nice, but profits are essential," Cole said. "That's going to live with us for a long, long time."

Reuss, GM's North American president, said the company is less bureaucratic. Employees can make decisions without taking everything to the top.

"We have a lot of smart people here. If they're so afraid and paralyzed that every decision comes to me or someone else, it's not very productive," he said.

The government also is getting out of GM's business, which should help sales. Late last year, GM bought back 200 million of the government's shares. That leaves taxpayers holding 300 million shares, which the Treasury plans to sell by early 2014.

Detroit could still stumble. GM's inventory is high and its U.S. sales aren't keeping pace with growth in the overall market. The industry is so competitive that cars can quickly get stale if companies don't invest in them. Growth could be hindered by the lack of available engineering talent or a lack of parts suppliers, many of whom closed during the recession.

But for now, new Chevrolets keep coming off the assembly line at Orion.

As she turned back to her station, Ballard took stock of the progress: "I think we're rolling along like is expected of us."