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Town of Tonawanda plant awaits details of GM plan Product needs linked to site's prospects

General Motors has unveiled a sweeping survival plan that will sharply reduce its number of U.S. jobs and plants.

While the plan commanded widespread attention, the details of how it will filter down to a site like the Town of Tonawanda engine plant are not known.

GM says it will reduce its total U.S. assembly, powertrain and stamping plants to 33 by 2012, from 47 in operation last year. Its executives are not yet identifying which facilities it will target.

Steve Finch, manager of the GM Powertrain plant in the Town of Tonawanda, said he is in a "wait and see mode" and doesn't have any insights as to how GM's planned cutbacks might affect the River Road site.

Finch said that heading into GM's Tuesday announcement, he wasn't aware of the Tonawanda site being at risk. He said he hasn't heard anything different since then.

What has some observers concerned is that GM increased by five the number of factories it intends to shutter by 2012. Last December, when the automaker appealed for government aid, it projected shrinking to 38 U.S. facilities. Auto sales have worsened since then, forcing GM to take a harder look at how much production capacity it needs.

Some observers of the auto industry say it is difficult to evaluate the Tonawanda plant's prospects, given the greater number of plants GM intends to shutter. Others believe it remains on safe ground.

"I think if you'd asked me a month ago, I'd say we were in great shape. Now I'm not so sure," said Art Wheaton, director of labor studies at Cornell University's School of Industrial and Labor Relations in Buffalo.

"It's very difficult to know what is at risk and what isn't," said Patrick Heraty, professor of business administration at Hilbert College.

The experts say management and labor at the Tonawanda plant can only continue what they have been doing: proving their value through high productivity and quality ratings, and cooperative labor relations.

"The Tonawanda plant can just continue to look for efficiencies in every nook and cranny that they can," Heraty said. In the bigger picture, GM is trying to bring down its fixed costs, as it tries to reshape itself to fit a dramatically smaller market for new auto sales.

Other experts believe that the Tonawanda plant's future remains secure, even with an expanded number of plant closings on the horizon.

"My sense is the Tonawanda engine plant is much, much safer than some of the assembly plants," said Nallan Suresh, professor and chair of operations management and strategy at the University at Buffalo's School of Management.

"The Tonawanda engine plant is probably one of the primary engine plants within the chain," he added.

Michael Omotoso, senior manager for global powertrain at J.D. Power and Associates, also believes that the Tonawanda site is not at risk of being closed. But he and Suresh expect to see the plant's production volumes and headcount decline over time, to match GM's needs.

Omotoso said the River Road site benefits from its diverse lineup of engines, serving different models. Engine plants with a narrower selection of products are bigger targets for consolidation or closing, he said.

Wheaton said other factors will also influence GM's decisions about which plants to keep, such as their proximity to vehicle assembly operations and the popularity of the models the plants supply products for.

Political factors, not just plant performance results, could carry weight, Wheaton said, adding that the Tonawanda site could have state and local politicians advocate on its behalf, playing up the plant's track record in innovation and technological improvements.

GM this year is also cutting 3,400 U.S. salaried jobs, as part of a broader reduction of its work force. The Tonawanda plant has 201 salaried workers. Finch said he doesn't expect the site to be immune to those cutbacks.

"There will be some, we just don't yet know what the numbers are," he said.


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