General Motors to Locate Small-Car Plant at Existing Factory in Orion, Michigan

General Motors to Locate Small-Car Plant at Existing Factory in Orion, Michigan

General Motors Corp. is close to announcing its decision to locate a new small-car plant at an existing facility in Orion Township, Michigan, The Wall Street Journal (subscription required) and The Detroit News reported today, citing unnamed sources.

GM spokespersons Tom Pyden and Sherrie Childers declined to confirm the location of the plant, but the former said an announcement would come as soon as today.

The automaker had been looking at three plants that were slated to close as part of GM's bankruptcy reorganization: in Orion; Spring Hill, Tennessee; and Janesville, Wisconsin. The Orion plant currently produces Chevrolet Malibu and Pontiac G6 sedans.

The Journal said the Orion plant was chosen in part because the region has many displaced autoworkers and because the facility is already a passenger-car plant, rather than a truck factory, meaning it potentially will be less expensive to retool for a small car, said one of the people familiar with the matter.

The News reported that tax breaks, not retooling savings, gave Orion the edge. According to the newspaper, Orion Township officials recently sweetened an offer to GM that includes a 100 percent tax break on new machinery and equipment for up to 25 years - more than double what was offered earlier this month.

GM could end up saving as much as $100 million in taxes, depending on the type of equipment installed in the plant and the type of production. The state also has been working on an incentive package, the details of which have not been released.

GM hasn't announced which small car will be built at the plant. Both GM's Chevrolet and Buick brands are expected to receive new small cars in coming years.

Building a new small car at a U.S. plant instead of abroad is required under an agreement GM recently signed with the United Auto Workers union.

The decision to pick the Michigan plant likely means that the plants in Tennessee and Wisconsin will close within 18 months.

Scott Doggett:  is an AutoObserver.com Associate Editor.