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Business 2009: The Cruze



Published: Tue, December 29, 2009 @ 12:00 a.m.

By Don Shilling

GM’s commitment to Lordstown tops this year’s business news.

Bolt by bolt, something big was constructed deep within the Lordstown car assembly complex this year — hope.

It came in the shape of $351 million worth of new robots and other equipment that were installed in the complex.

General Motors remained firm that the investment had to be made even as it tumbled into bankruptcy in 2009, closed other plants and said it would drop brands such as Saturn and Pontiac.

The robots were crucial because they would piece together the Chevrolet Cruze, which is a key part of the automaker’s planned turnaround.

That commitment gave hope that GM Lordstown — the area’s largest industrial employer — will survive for years to come, and so it was named the top business story of 2009 by Vindicator editors and reporters.

In a year dominated by a recession and job cuts, the area needed a dose of hope this year.

“It was a year we’d like to forget,” said Jim Graham, president of United Auto Workers Local 1112 in Lordstown.

Like much of the Mahoning Valley, the car complex struggled in 2009.

After adding a third shift of workers to build more cars in 2008, Lordstown scaled back this year as the auto market slumped. The afternoon and midnight shifts were laid off, and then the entire plant was shut down for part of the summer.

But as the year winds down, talk is focused on better days ahead.

The complex is back to two shifts and has about 3,500 hourly and salaried workers on the job. President Barack Obama came to the plant in September and said the plant’s revival demonstrates that the U.S. auto industry was worth saving.

The Cruze will be launched this coming summer, and officials have said Lordstown may build other vehicles. Union officials hope that will mean a third shift will be brought back on at some point.

“It’s been a roller coaster,” Graham said. “We’ve had our peaks and valleys, but hopefully we’re headed back up again.”

DELPHI CORP.

Emerged from bankruptcy in 2009, but it shocked thousands of area retirees by dropping their pension plans and health care. Retirees faced cuts of between 30 percent and 70 percent as pensions were taken over by a federal agency. Hourly retirees were saved from the cuts as GM agreed to make up the difference, but salaried retirees continue to mount a political attack in Washington and Columbus in hopes of having their pensions restored.

• V&M Star Steel worked with the cities of Youngstown and Girard to create a plan for a proposed $1 billion expansion of its Youngstown mill. Girard agreed to allow land to be annexed to Youngstown, and the two cities agreed to share income tax proceeds. Now, V&M has to decide whether to go ahead with the expansion that would create 400 jobs.

• Forum Health plunged into bankruptcy, calling into question the future of the system that includes Northside Medical Center, Trumbull Memorial Hospital and Hillside Rehabilitation Hospital. Lenders insisted that Walter “Buzz” Pishkur resign as chief executive and now are working with the Forum board to determine whether to sell the system.

• A lingering recession pushed the Mahoning Valley’s unemployment as high as 14.9 percent this year. It was the highest jobless rate for the area in 26 years.

• Some bright spots occurred in downtown Youngstown, however. The city-owned Covelli Centre is on pace to finish 2009 with an operating profit, which would be its first. Also, Realty Tower opened and offered luxury apartments in what used to be a vacant office building. Plus, VXI Global Solutions opened a call center that has created 250 jobs so far with perhaps 250 more to come.

• The image of Youngstown was boosted in 2009 when Entrepreneur magazine named it one of the Top 10 cities in the nation to start a business. The magazine cited the Youngstown Business Incubator’s successes in helping new businesses get off the ground.

• Local auto dealers suffered through extremely low sales volumes, but some dealers suffered an even worse fate. As automakers trimmed down their dealer networks, Frederick Chrysler Dodge Jeep in Boardman lost its franchise and closed. Also, the Preston dealership in Warren lost its Chrysler franchise but continues with BMW. GM is in the process of winding down its Saturn and Pontiac lines, which will impact local car dealer Jim Pace, and sold its Hummer line, which is offered locally by Greg Greenwood.

• The future of Severstal Warren, the former WCI Steel, hangs in the balance at the end of 2009. The mill’s steel-making operations were idled in October 2008, and the rest of the mill was closed earlier this year. About 1,200 workers are laid off, and Severstal has said it will reopen the mill when market conditions improve.

• Local grocery Henry Nemenz closed his Poland Sav-A-Lot store this year, which was the second time he has shut down a location since the United Food and Commercial Workers started picketing his businesses in 2007. The union is out to bring attention to Nemenz’ nonunion work force, but the grocer insists his workers are treated fairly. He also listed other reasons for the Poland store’s failure and left the door open for a future, full-range IGA store in the village.

shilling@vindy.com


The Mahoning Valley’s top business stories of this decade:

General Motors reverses a plan to close Lordstown and delivers two new models and $1.3 billion in renovations.

Unemployment rates consistently run above state and national averages.

Delphi Packard Electric reduces area operations, with hourly employment falling from 5,500 to 700.

Turning Technologies expands into a $6 million headquarters, and the Youngstown Business Incubator continues to work with other emerging companies.

Humility of Mary Health Partners rises to be the dominant health-care system as Forum Health sinks into bankruptcy.

WCI Steel in Warren survives bankruptcy and then is bought out by a Russian steelmaker. The mill is idled by a market downturn.

Youngstown/Warren Regional Airport loses its daily air service but receives a federal grant to try to attract a new carrier.

Youngstown-based Phar-Mor goes out of business, and 73 stores nationwide are closed.

First Place Bank and Home Savings and Loan Co. expand in other areas but suffer large losses.

Call centers provide a growth industry.

Source: Vindicator editors, reporters


Comments

1thepotstirrer(67 comments)posted 4 years, 8 months ago

Hey Don,
I think the title of your article is misleading. GM is now a federally run government program. The monetary vacuum known as GM is built on the same business 'chassis' as Social Security and Medicare, BLACK HOLES OF TAXPAYER MONEY!!

To classify GM as an actual business is insulting, it should have been allowed to file for bankruptcy and reorganize on it's own. GM would fall in the '2009 Top Ten Charitable Stories of the Year category.'

On a related note, Pontiacs have a 46% discount coming down the pipe. Must be a going out of business sale. Maybe GM will ask some employees to stand on the corner of 224 & Market with paper signs stapled to wooden sticks like the furniture stores!! You could even have them dress up in fuzzy costumes, that would be great.

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2downsized(5 comments)posted 4 years, 8 months ago

"Hope" is all that Lordstown has. Their management has continued to make mistake after mistake, costing them a lot of money. The added third shift was a joke. They moved many many people, hourly and salary to man the added shift, that cost them a ton of money. Then, they moved a lot of people again when the shift was ended a few months later, costing more money to "relocate" these employees. The hourly people made out, the salary people did not. Many good salary employees got screwed out of their jobs, due to the government involved downsizing, and the "rules" they had to follow.

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32ez2c(17 comments)posted 4 years, 8 months ago

my uncle got a subaru for his rental car this christmas and hes a die hard dale #8 G.M. type of fellow he threw a fit at avis because they didnt have the right car for him . he loved the car my aunt said, but he wouldnt say that to anyone of course because lordstown g.m.pays his bills. i love it when old farts that think they know it all get owned. ha ha shame on you people for even thinking you can compete with honda , toyota ,subaru,kia ,or even fords. tell your children the truth

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4HaydenThomas(208 comments)posted 4 years, 8 months ago

The only people who think GM builds cars that are on par quality wise with the imports are people who've never owned an import. As the poster above said, the die hard GMer who drove the Suburu, quietly thought what most of us know, the imports are better.

GovernmentMotors is a failed organization. Failed mainly because of unionism. Sure, management made some bad decisions but most of those decisions were based on an employee cost structure that made other decisions determined by the employee costs. Not only that, but threats of strike and shutdown if management did not give the union exactly what it asked for. Remember the jobs bank?

Is it too big to fail? Not at all. In fact, by keeping it alive, the government almost guarantees that Ford and others will struggle to remain viable. Ford did it by the book. GM and Chrysler not only are taxpayer supported, but also got preferred treatment in bankruptcy that stiffed the bond holders who are first in line in most bankruptcies. The entire process is questionable and probably a payback for union support of the Democrats in 2008.

2010 should be fun. We'll see if GM has any takers when they supposedly try to issue stock in the summer. My guess is either nobody will be dumb enough to pony up the billions to control GM or a foreign country like China will use GM to get the dealer network for distribution of Chinese built cars.

I wonder if the union members will enjoy building and driving Asian vehicles?

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52ez2c(17 comments)posted 4 years, 8 months ago

well said hayden...most of them just dont know the difference /hope 4 the vally -i know about 10 people who work at gm .....you dont need a college degree or even a high school diploma in a lot of cases

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6AXLE69(181 comments)posted 4 years, 8 months ago

usa1-pro-conservaterican,why do you continue to call yourself an idiot.That isn`t healthy.You were a UAW member for 24 years right? What job did you do?You should be proud that your UAW President Jim Graham was recognized by the Vindicator as being one of the areas top persons of the decade.You should be supporting the great union members keeping this Valley afloat and not acting like a child calling both them and yourself idiots.The UAW helped you attain the suburban lifestlye that you enjoy today.Show some gratitude for goshsakes.

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