In a big win for Michigan, General Motors will invest $7 billion in four manufacturing facilities, making the state the "hub" of electric vehicle development and manufacturing.
GM said Tuesday it will spend $2.6 billion to build a new battery factory in the Lansing area and $4 billion to convert its existing factory in Orion Township to make electric pickups. It will also spend about half a billion dollars to make upgrades to its two existing vehicle assembly plants in Lansing.
GM calls it the "single largest investment announcement in GM history," saying the move will create 4,000 jobs and retain 1,000 others.
Economists say that, in turn, will create thousands more ancillary jobs. GM currently employs 50,631 people in Michigan.
"We are building on the positive consumer response and reservations for our recent EV launches and debuts, including GMC Hummer EV, Cadillac Lyriq, Chevrolet Equinox EV and Chevrolet Silverado EV," said GM CEO Mary Barra in a statement. "Our plan creates the broadest EV portfolio of any automaker and further solidifies our path toward U.S. EV leadership by mid-decade."
As part of Tuesday's announcement, GM said Orion Assembly, along with Factory ZERO in Detroit and Hamtramck, will manufacture the 2024 Silverado EV and GMC Sierra EV pickups.
GM also said it is working to build a new, more reliable supply chain through strategic supplier agreements for batteries and EV components. It is expected to be scalable, more resilient, more sustainable and more North American focused. Global supply chain issues have hampered GM and other automakers throughout the pandemic.
Michigan wins
Orion Assembly and the new battery cell plant will support total production of 600,000 full-size electric pickups when both Factory ZERO and Orion are fully producing in a few years, said GM President Mark Reuss, adding there will be "operational upside at both plants. Look for us to keep growing the capacity at Factory ZERO as well."
That's huge considering the state recently lost out on Ford Motor Co.'s $11 billion investment to build several new plants, including battery factories and an EV assembly plant, in Kentucky and Tennessee. That investment will create 11,000 jobs.
Reuss said GM's investment in Michigan made sense because GM has many long-standing partnerships with suppliers based in the state and GM worked with local governments for various financial incentives.
The announcement from GM came on the same day the Michigan Strategic Fund approved a series of incentives that total about $824 million to build the battery plant and expand Orion Assembly plant.
"This news is great for us and for Michigan, the epicenter of where we're developing EVs," Reuss said. "Michigan will be the recognized hub of innovation in the U.S. for EV development and EV manufacturing."
Barra said the investment would not have been possible without support from Gov. Gretchen Whitmer, the state Legislature, Orion Township, the City of Lansing, Delta Township and "our collaboration with the UAW and LG Energy Solution."
GM will save tens of millions of dollars by integrating its battery assembly into its EV production and converting existing assembly plants, Reuss said.
GM aims to have more than 1 million units of EV capacity in North America by the end of 2025 and to convert half of its North American assembly capacity to EV production by 2030.
Ultium Cells Lansing
Ultium Cells LLC, GM's joint-venture with battery maker LG Energy Solution, will spend $2.6 billion to build a new battery cell plant in Lansing on 590 acres adjacent to GM's Lansing Delta Township Assembly plant.
The acreage is inside the boundaries of Delta Township but would be conditionally transferred to the City of Lansing because only the city, and not the township, can offer GM a tax-exempt renaissance zone, Bob Trezise, president and CEO of the Lansing Economic Area Partnership, told the Free Press in a previous interview.
The plant, to be called Ultium Cells Lansing, will create more than 1,700 new Ultium Cells jobs when it is fully operational, Reuss said. Site preparations will begin this summer and battery cell production is scheduled to begin in late 2024.
It will supply battery cells to Orion Assembly and other GM assembly plants, Reuss said.
Ultium Cells is currently finishing construction on a new EV battery plant in Lordstown, Ohio, that will start running this year and create 1,100 new jobs in the area where GM closed its former Lordstown Assembly plant in 2019.
Ultium Cells is building another battery plant in Spring Hill, Tennessee, to open next year. Each plant costs about $2.3 billion. The company plans to build a fourth battery plant in the U.S. but the location is yet to be announced. Reuss said as EV adoption grows, more battery plants could be added.
"If you look at where we put other cell plants, Lordstown and Spring Hill, of course we look at other states where we have assembly plants," Reuss said. "But we have a vested interest here in Michigan."
Because the Ultium plants are a joint-venture, the UAW will have to organize the plants and negotiate a separate contract from the national agreement it has with GM at GM's assembly, parts and engine facilities.
A joint statement from UAW President Ray Curry and Terry Dittes, UAW vice president and director of the UAW GM Department, said GM's commitment creates a strong future for UAW members, their families and communities.
"For UAW Local 5960 Lake Orion the planned new products and advanced electric vehicle retooling builds on their plant's history as a cutting edge manufacturing facility with a highly skilled and experienced EV workforce," the statement said. "For UAW members at the GM Lansing Delta Township and Lansing Grand River Assembly plants the investments are commitments to continue and expand into new technologies as the industry transitions."
In regard to the new Ultium factory, Curry and Dittes said the union "stands ready to welcome new members as Michigan becomes a center of electric vehicle manufacturing."
Orion Assembly
GM will also convert Orion Assembly to build the 2024 Chevrolet Silverado EV, which GM revealed earlier this month, and the electric GMC Sierra pickup, which GM has yet to reveal.
Orion Assembly will be GM's second assembly plant tagged to build full-size electric pickups. Factory ZERO in Detroit and Hamtramck started building the 2022 GMC Hummer pickup late last year.
Here are the plants GM has designated to build EVs to date:
—Factory ZERO to build GMC Hummer EV pickup, Hummer SUV, Silverado EV, Sierra EV and Cruise Origin self-driving EV.
—Spring Hill Assembly in Spring Hill, Tennessee to build 2023 Cadillac Lyriq SUV.
—Orion Assembly to build the Bolt, Bolt EUV, Silverado EV and Sierra EV pickups.
—Ramos Arizpe, Coahuila, Mexico, to build 2023 model year EVs.
—CAMI in Ingersoll, Ontario, Canada for commercial electric vans.
The Orion expansion will create 2,350 jobs and retain 1,000 jobs, Reuss said.
One week ago, GM got a big tax break in Orion Township, located about 40 miles north of Detroit, to expand the assembly plant where GM presently makes the Chevrolet Bolt EV and Bolt EUV.
A property tax abatement is basically a subsidy that lowers the cost of owning property by reducing or eliminating the taxes a company pays on it.
GM said it plans to start the Orion plant expansion in July and finish the construction by December 2025.
GM employs about 1,200 people at Orion Assembly, most of whom are hourly union members. The plant has been mostly idle since last summer and it will remain down through February as GM addresses a global recall on 2017-22 model year Bolts that may contain defective batteries that could start a fire.
Greater Lansing economy
In addition to the EV-related investments, GM is investing $510 million in Lansing Delta Township Assembly and Lansing Grand River Assembly plants to upgrade their production capabilities.
The investments and new GM plant will be a welcome respite to Lansing area businesses, which last year were hit hard when GM had to idle its facilities for months at Lansing Delta Assembly and Lansing Regional Stamping plants due to the global semiconductor chip shortage that continues to disrupt new-car production across the industry.
Delta Assembly builds the Buick Enclave and Chevrolet Traverse SUVs and the new investment will retool the facility for production of the next-generation Traverse and Enclave.
The plants' workforce of 2,700 people were laid off starting July 19 and did not resume work until the week of Oct. 4. The impact was felt in nearby businesses, especially Tony M's restaurant, less than a mile from the plant, where workers would regularly eat breakfast, lunch or dinner at the eatery. It even delivered meals to the plants.
"Our revenue is down 40%," Stefan Farrell, owner of Tony M's, said last September. He was forced to lay off 20 of his 39 employees and reduce his business hours.
GM's Lansing Grand River, where about 1,600 workers make the Chevy Camaro, Cadillac CT4 and CT5 sports cars, experienced periodic production disruptions starting in mid-March through early October. GM's investment there will pay for various plant upgrades, GM said.
Jobs, jobs, jobs
The new battery plant and the Orion expansion are key to Michigan's economic growth across all sectors, said Patrick Anderson, CEO of East Lansing-based Anderson Economic Group.
"The majority of jobs are from small businesses and entrepreneurs making decisions where there is no state government policy and local government tax incentive available," Anderson said. "For those, we need to have a good business climate and a culture that encourages people to live and work in Michigan."
For each full-time new job created at a factory, typically two more jobs are created elsewhere in the state in relation to the plant, Anderson said.
"It is a big multiplier effect that is related to those bona fide, new full-time jobs," Anderson said.
Then building the plants requires jobs in construction, where there is presently a shortage of workers, meaning high wages, Anderson said.
"It'll be overtime work and extra pay and importing workers from other states to get that work done," Anderson said. "That's a positive because some of these workers will stay here."
They will also spend money at local restaurants and other businesses while working here.
Why Michigan?
Last month, Gov. Gretchen Whitmer and state lawmakers enacted a new $1 billion fund to attract new plants, which Anderson said helped make an attractive business case for GM.
Beyond that, there are three reasons why Michigan had a better shot at a major EV investment from GM than it did for Ford, Anderson said.
First, GM already has three big plants able to adjust to EV production, including battery assembly: Orion, Delta Township and Factory ZERO.
Second, the Delta plant has the large adjacent land area, and the logistics connections by rail and highway, necessary for this kind of investment, Anderson said.
Finally, putting EV-oriented manufacturing capacity at Delta Township proves GM is serious about putting electric drivetrains into a wide range of vehicles, Anderson said. He noted that about 80% of EVs sold in America are luxury sedans, but the majority of gasoline-powered vehicles sold are SUVs, pickups, sports cars and non-luxury sedans and coupes.
"Obviously, if EVs are going to be successful, they have to be at the price point and functionality that most Americans want," Anderson said. "The investments by GM and Ford are huge, and the risks involved are high. Tax incentives might help attract a plant, but the value proposition has to be there for the investment itself."
Win some, lose some...
GM's investment in Orion Township and Lansing is also significant because Michigan almost lost another plant.
In November, President Joe Biden came to GM's grand opening of Factory ZERO where GM spent $2.2 billion to retool it to build the electric Hummer. It will also build in the future: the 2023 Hummer SUV EV, the Cruise Origin all-electric self-driving car and the 2024 Silverado EV. It currently employs about 360 people, but GM has said it will eventually employ 2,200 workers.
Factory ZERO, previously called Detroit Hamtramck Assembly, almost didn't exist.
In 2018, GM said it would permanently idle five factories in North America. Detroit Hamtramck was one of them, but in its 2019 labor negotiations with the UAW amid a 40-day national strike, GM agreed to retool the plant to make EVs.
Warren Transmission plant, located at Mound and Nine Mile roads, wasn't so lucky. The plant's last regular production day was in 2019, although it reopened the following year to make medical face masks during the COVID-19 pandemic.
Last month, GM sold the 117-acre property that once housed Warren Transmission plant, to Kansas City-based Northpoint Development. Northpoint looks to build 2 million square feet of new facility there that could result in $152 million in new development and up to 600 new jobs.
GM is also spending $2 billion to convert its Spring Hill Assembly plant in Tennessee to make the 2023 Cadillac Lyriq SUV. GM builds the Cadillac XT5 and XT6 SUVs and the GMC Acadia SUV at Spring Hill. It also makes a variety of engines used across GM's lineup.
Spring Hill Assembly will continue to make the XT5 and XT6 plus the electric Lyriq, but the GMC Acadia production moves to Lansing Delta Township Assembly.
