Upgrades at Fairfax bolster KC's future
Over the last three years, the auto industry and GM in particular have staged a major turnaround.
The reality of the company’s revival was driven home Monday with the welcome announcement of a $600 million investment in GM operations at its Fairfax assembly plant.
The announcement reinforced the status of Fairfax as one of the company’s “foundational” plants. And it means the future of the roughly 4,000 hourly and salaried jobs at the facility is more assured.
Combined with the $1.1 billion that Ford is investing in its Claycomo plant in Missouri, the GM move helps illustrate the fact that the Kansas City area is benefiting from a great improvement in the state of today’s car market.
Those days were much darker in 2009, when GM careened toward bankruptcy following a $38 billion loss the year before. GM sought a federal bailout, and the government anted up $50 billion, prompting many to tag the company “Government Motors.”
Bankruptcy sent the carmaker through the “debt wash,” which cut its automotive debt from nearly $46 billion to $5.6 billion. GM closed plants and radically cut costs. Its union agreed to a two-tier wage structure, allowing newer hires to come in at a lower wage. The number of hourly workers dropped from 129,000 to 49,000.
In relatively short order, GM was returning a profit. Worldwide sales last year were 9.3 million vehicles, just behind global leader Toyota.
Its presence in the U.S. market, however, remains diminished. Last year’s 17.9 percent domestic market share was the smallest in decades. Production of the Fairfax-produced Chevy Malibu, a model facing fierce competition from other nameplates, was briefly idled because of inventory buildup.
Still, GM has been building a solid foundation. It can boast 11 consecutive profitable quarters. Investors have shown growing confidence in its prospects, althoguh GM stock remains below the price at which the shares returned to market.
The company’s massive new investment in Fairfax, rivaling the amounts sunk into the Truman Sports Complex renovation projects, will create a new 450,000-square-foot paint facility, a new stamping press and other improvements.
The announcement was made by Chairman and CEO Daniel F. Akerson, and marks one of the company’s biggest-ever plant investments. It also symbolically closes the door on a period of extraordinary insecurity, not only regarding the jobs at Fairfax, but the economic health of the entire Kansas City metro area.
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