The Death of the SUV and the Wisconsin City Dealing With the Repercussions

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Opened in 1919, the GM auto plant in Janesville, WI is the company’s oldest in the country. It has survived both the Great Depression and WWII. The place is an institution. And, according to GM CEO Rick Wagoner, that institution is going to close by 2010.

This is but one of four SUV-producing auto plants that will feel the pinch of corporate belt-tightening, as production costs soar and public opinion of larger, gas guzzling cars diminishes. Along with Ford and other automotive manufacturers, GM intends to focus production on smaller, more fuel-efficient vehicles as we witness the “structural” rather than a “cyclical” change in the auto industry, according to Wagoner.

The GM CEO even said that the company will take the Hummer under “strategic review,” hinting at possibly selling off the once immensely-popular line. For all intents and purposes, this symbolizes a win in the war against the fuel-inefficient, impractical SUV that has haunted environmentalists for years.

In seeming victories like these, however, the consequences of significant shifts can sometimes be neglected. While GM shares rose in midday trading on the wake of this announcement, autoworkers from Ontario, Canada to Toluca, Mexico were left to wonder what they were going to do next.

In Janesville, the GM plant has practically been the city’s entire economy for generations. And if previous plant closures serve as any kind of precedent (GM cutbacks in the late 1980’s leveled 4,000 jobs virtually overnight in Norwood, Ohio, accounting for nearly 1/6 of the city’s population), the roughly 2,500 workers employed in Janesville could have a very bleak future ahead. GM has indicated it has no plans to bring any new auto lines into the plant to replace its SUV and mid-size truck production.

Though state of the art, the facilities at Janesville are highly specialized for larger vehicle production, and it is much more cost-effective for GM to divert resources elsewhere, according to the company.

While many of us on the outside view this situation with a certain guarded ambivalence, the citizens of Janesville seem surprisingly optimistic. While many other cities similarly affected by these types of closures have been paralyzed, Janesville seems to be taking a more proactive approach.

The Milwaukee Journal Sentinel reported earlier this month that Janesville’s business leaders have already, “quietly, to avoid fueling rumors,” discussed how the city would respond if a closure like this would ever happen. Though the loss of the plant will nonetheless be a huge blow to the city’s economy, sending a ripple effect through smaller manufacturers in the area that supply parts to GM, community officials recognized the importance of economic diversification a long time ago.

In recent years, Janesville officials have laid the groundwork for more than $150 million in industrial development, the majority of which has nothing to do with GM or cars. Spanning more than 4 million square feet, the soon vacant GM plant could transform into an industrial park or even a regional transportation hub.

“The property has excellent utilities, railroad access, and a new four-lane road,” according to Doug Venable, Janesville’s Economic Development Director.

People in Janesville have been understandably reserved talking about its plans, but they have no doubt taken Norwood’s example anything but lightly. In Norwood, city officials converted the space into a mixed-use business park when its GM plant closed, which revitalized the local economy, replaced practically all the jobs that were lost, and brought in millions of dollars in investment capital.

Some have even hinted at retooling the plant for smaller or green products, according to Laura Dresser, associate director of the Center on Wisconsin Strategy at the University of Wisconsin-Madison. In the words of Dresser, Janesville could soon be the hub for “products that have a brighter future.”

Readers: What do you think? For every Janesville and Norwood, I can imagine there can be just as many other places that fail to be as proactive. Is there a price, then, that we are paying to witness the transformation of the transportation industry?

Ashwin is an Associate Editor of Triple Pundit. He recently returned to the Bay Area after living in Argentina, where he wholeheartedly missed the Pacific Ocean. He is a freelance editor and media and marketing consultant.After a brief stint working in the wine world, when not staring blankly at a computer screen, you'll find him working on Anand Confections or at 826 Valencia, where he has been a long-time volunteer.