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GM, Sumitomo plans prove manufacturing is far from dead

Rust Belt manufacturing is far from dead in the Buffalo Niagara region.

While the shiny new projects of the Buffalo Billion are generating all the buzz of a New Buffalo, some of the region's Old Economy manufacturers are showing they have the resiliency to compete in the 21st Century.

Never was that more apparent than this week, when one of the region's biggest Old Economy manufacturers  – General Motors Corp. – revealed plans to invest $328 million in two Buffalo Niagara factories, joining Sumitomo Rubber and General Mills in committing to major upgrades of their decades-old Buffalo Niagara factories. The biggest winner was GM's Town of Tonawanda engine plant, which is in line for a $296 million upgrade for future engine production.

"This has to be a huge vote of confidence for the Tonawanda engine plant," said Arthur Wheaton, the director of Western New York Labor and Environmental Programs at Cornell University’s School of Industrial and Labor Relations in Buffalo.

[Related: GM to invest $330 million in Tonawanda, Lockport plants]

But it wasn't just the GM investment, which also includes $32 million in upgrades for a Lockport powertrain cooling components plant that was on the ropes just five years ago.

*In August, Sumitomo Rubber said it will invest $87 million in its 93-year-old tire factory in the Town of Tonawanda that will expand its product line and reduce its operating costs.

*Three months ago, General Mills said it would spend $25 million to shift production of its Corn Chex and Honey Nut Chex cereals to its Buffalo plant. The South Michigan Avenue factory, the company’s oldest cereal facility, beat out four other, more modern General Mills plans to win the new cereal lines.

"You walk the streets, you see a different Buffalo," Gov. Andrew M. Cuomo said during Wednesday's announcement in Tonawanda. "You see international companies now coming to Buffalo and investing in Western New York."

In these days of globalization and automation, you can't always measure the viability of a factory by how many workers it's hiring. But it's a pretty safe bet that a factory that's attracting new investment for upgrades and new products is efficient, cost-competitive and productive.

For today's factory workers, who have had to learn new skills to operate the machines that now do the repetitive assembly work they used to perform, investment means job security, but not a ton of new hires.

For Old Economy factories, investment means new products and new equipment to better compete with newer facilities, possibly in low-cost countries, that pose a never-ending threat.

"It means job security because they don't put $300 million into a plant, only to close it next year," Wheaton said.

But that investment doesn't come easy. Manufacturers love to pit one plant against another, with the reward of new investment dangled as the prize for the factory that rates well, not just on cost, but on factors such as quality and productivity.

"It's not a mistake that we received this work," said Chuck Herr, the shop chairman for United Auto Workers union Local 774 at the Tonawanda engine plant. "It's because Tonawanda builds the best engines in the world."

That might be hyperbole, but there's no question that GM wouldn't be putting money into a 75-year-old engine plant if workers and the plant's management hadn't shown twice before that they could pull off the launch of a new engine line.

Some of the credit for that goes to the UAW, which for more than two decades has been unusually progressive and flexible in its approach to labor-management issues.  As Wheaton notes, the big GM investment wasn't linked to any type of pay cuts or other concessions from the UAW.

"I think the unions are pragmatic about it," Wheaton said.

"The company says: We want dependability. We want quality," he said. "The union's still going to protect a worker's rights. But the best way to protect workers is to protect their jobs."

At the former Delphi plant in Lockport, which was in "a perilous position" after GM took it over five years ago, that meant coming up with "unique, non-traditional solutions" so the facility could go after new work that previously was out of reach, said Mike Branch, the shop chairman for UAW Local 686 in Lockport.

That's why Branch was so pleased with GM's $32 million investment. While it won't lead to new hires at the Lockport plant, it will protect 320 jobs there.

As we know from painful experience, merely protecting factory jobs is no easy task. Since 1990, nine of every 20 factory jobs in the Buffalo Niagara region has disappeared, leaving a gaping hole in the local economy, since the average manufacturing job today pays around $62,700, according to federal wage data.

So GM's $328 million in local investment had the UAW's Herr feeling pretty thankful.

"Remember, there are plants that are losing shifts, and all the work that is going out of the country," Herr said. "We have many things to be grateful for in this holiday season."

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