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Old 12-23-2003, 08:57 AM   #1
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Investment a boon for Saturn plant
GM will pay $15 million to retool for a new vehicle
By LULADEY B. TADESSE
Staff reporter
12/23/2003

General Motors will invest $15 million next year in the Saturn plant near Newport to revamp the body shop and assembly line in preparation for a new vehicle, company officials confirmed Monday.

GM would not say what the vehicle will be or when production will begin. But analysts and dealers said they expect it to be the new Pontiac Solstice sports car, which will appear at the North American International Auto Show in Detroit on Jan. 4.

The decision to produce a new vehicle at the Boxwood Road plant is good news for the plant and its roughly 1,500 workers. The facility, which makes the Saturn L-series, has been shut down for more than a month throughout the year because of lackluster sales, and GM officials said Monday that the plant will close again for the entire month of January because sales continue to be weak.

Gov. Ruth Ann Minner said the state is pleased with GM's decision to bring a new vehicle to the Newport plant. "It means security for those people who work there," she said.

Union officials did not return phone calls.

The L-series has been a disappointment for GM since its launch in 1999. Analysts say the L-series, Saturn's first entry into the midsize market, has not been on par with competitors such as the Toyota Camry and Honda Accord in terms of design and reputation.

In November, sales of the L-series sedan and wagon were down 44 percent compared with the same month a year ago. Year-to-date sales as of November were down 18 percent.

As a result of the weak performance, GM officials said the Saturn plant will shut down production and temporarily lay off its 1,100 union assembly workers in January. GM plants around the country will be closed Wednesday through Jan. 5 for the holidays, but the Boxwood Road plant will remain closed until Feb. 2. The company has not decided whether the plant will open full time in February.

"We are faced with the unfortunate situation where we have a product - by no fault of the work force - that is not doing well in the marketplace," said Dan Flores, spokesman for GM Manufacturing. Earlier this year, GM laid off about 400 workers from the plant and reduced production to one shift.

Revamp needed

Bruce Belzowski, senior research associate at the Office for the Study of Automotive Transportation at the University of Michigan, said the L-series needs to be revamped if it is to survive. "It is competing in an extremely challenging segment and unless it has a better update than the current model, sales will continue to decrease," he said.

Analysts said GM's investment in the plant will keep it viable despite the challenges facing the L-series. "When a product is assigned to a plant like this, it is a good thing. It tells you they have ideas and plans for that plant," said David Cole, president of the Center for Automotive Research in Ann Arbor, Mich., who predicted the Pontiac Solstice is slated for Newport.

He said he expects GM will reconfigure the plant in the near future to manufacture the Solstice, which is built on a different platform than the L-series.

Analysts said that while the Solstice will be an exciting new product for the Newport plant, it is a low-volume vehicle, which means the plant will produce fewer than 100,000 a year. At that rate, the plant will not be running at capacity with the Solstice alone. "The vehicles that are going to end up in the plant may not be high volume individually, but there is always room for more than one," said Jeff Brodoski, auto analyst at J.D. Power & Associates.

GM officials would not comment on the possibility of building more than one vehicle at the Newport plant. Previously, the company said it plans to stop making the L-series in 2005. But Flores said Monday there is no set date to discontinue the L-series. He said it is unlikely the $15 million investment will make it possible for both the L-series and the unnamed new product to be produced simultaneously at the plant.

Meanwhile, local GM dealers who have been lobbying for a new product for the Saturn plant said they are excited about the possibility of the sports car being made in Newport. "It is a pretty crucial piece not only to the employment puzzle, but also for the General Motors dealers," said Frank Ursomarso of Union Park Automotive Dealerships in Wilmington.

Reach Luladey B. Tadesse at 324-2789 or ltadesse@delawareonline.com.
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Old 12-23-2003, 03:23 PM   #2
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So will there be a 2005 L-series? When is the Solstice supposed to go into production?
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