Detroit Hamtramck retooling for electric products with a $2.2B investment, 2,200 manufacturing jobs.
Since 1985, General Motors’ Detroit Hamtramck assembly operation has been a big plant making big cars.
At 4.1 million square feet built on 365 acres, the complex spans two municipalities and employs 850. Four million cars have been built there over 35 years. But on Feb 27th at 8:30AM, a red Chevrolet Impala rolled off the line—the last unit of an iconic nameplate that dates to 1958.
Impala was created by Chevrolet as the sports-oriented variant of the division’s bread-and-butter full size family car, but the 21st century has not been kind to the traditional large sedan. First minivans, then SUVs and crossovers, have dominated the family car market over the last 20 years and in the face of falling sales, it was inevitable that GM would follow Ford and FCA in closing full-size sedan lines.
With the end of Chevrolet Volt production out of the facility in 2019, and the recent closure of the Australian Holden brand, the future was uncertain for the operation. While other large assembly facilities in the GM universe have been shuttered, sold or repurposed, General Motors has announced a $2.2 billion investment in Detroit-Hamtramck assembly to produce a range electric trucks and SUVs. The first product will be an all-electric pickup with production scheduled to begin in late 2021.
Pickups routinely top the sales lists in the U.S., with Ford’s F-150 and GM’s Silverado/Sierra full size vehicles leading the pack. Many are looking to Rivian to lead the EV pickup market due to that company’s 100,000-unit launch order from Amazon. Light trucks are a cash cow for Detroit Three automakers, and they represent a market in which few foreign automakers have succeeded.
Times are changing, however and electric pickups are widely regarded as a necessity for the U.S. market in this decade. Demand appears to be there with Tesla’s Cybertruck product unveiling generating over 500,000 pre-orders through February 18th. Light trucks are still the future for Detroit-Hamtramck, but perhaps the most important part of the announcement isn’t about high volume light trucks—it’s about autonomous vehicles.
Alongside the E-pickups, Chevrolet will build the Cruise Origin, a shared electric self-driving vehicle recently unveiled by Cruise in San Francisco. With no steering wheel or conventional driving controls at all, the Cruise Origin is intended to replace the production car-based self-driving prototypes with a vehicle designed from the ground up for autonomous TaaS (Transportation as a Service) operations. While Cruise and Google-owned Waymo have achieved disengagement rates for self driving cars that suggest they’re safe for urban motoring, the mass production of a car not intended to be operated by a human is a game changer for urban transportation. It also suggests that the regulatory agencies like the NHTSA, DOT and the NTSB are either on board or are expected to release guidelines soon. With both products replacing Impala and Cadillac CT6 production, Detroit-Hamtramck will be GM’s first fully dedicated electric vehicle assembly plant.
“Through this investment, GM is taking a big step forward in making our vision of an all-electric future a reality,” said Mark Reuss, GM president, during a press event at the plant with Michigan Gov. Gretchen Whitmer and other local and state officials. “Our electric pickup will be the first of multiple electric truck variants we will build at Detroit-Hamtramck over the next few years.”
Estimated production volumes have not been announced by the company, but employment levels will be substantially higher than the ICE operations—at an estimate, 2,200 salaried and hourly employees. Retooling for an entirely new product line won’t be cheap, and GM will also invest an additional $800 million in supplier tooling and other projects related to the launch of the new electric trucks. This will include upgrades to paint and body shops as well as general assembly, which will include new production machinery, conveyors, controls and tooling. GM expects to idle the plant for “several months” beginning in March to complete the transformation.
The Hamtramck announcement runs against the current trend for automotive assembly to locate in greenfield sites in the South, in right-to-work jurisdictions. The reasons are rooted in the basic inputs of manufacturing: supply chain, labor and money.
GM’s Orion assembly facility is the current home of GM’s Bolt electric vehicles, with battery development and assembly located in Warren and Brownstown, Michigan. Cells for GM E-vehicles will be built at a GM-LG Chem joint venture in Lordstown, Ohio, which is itself a $2.3 billion investment and, not coincidentally, is the site of the former GM Lordstown Assembly plant. This facility was recently sold by GM Lordstown Motors, who are developing an electric pickup truck.
To date, few issues with the UAW have been reported as the union is embracing the switch to electric vehicles, publishing an extensive whitepaper on the shift from ICE and the expected disruption to labor.
However, the key factor behind the renewed drive for Michigan assembly may be the incentives offered by the state. State support for GM has been historically complex and the new deal negotiated with GM requires the company to invest $3.5 billion dollars over 10 years. The deal includes no direct financial incentives but as reported by the Detroit News, GM will accept lower, capped tax breaks, a reduction of $325 million dollars to $2.28 billion. The agreement also relaxes a staffing provision in the 2009 deal that limited GM to claim no more than 6,750 jobs at GM’s Warren Technical Center and none at the Detroit Renaissance Center headquarters.
The result is more than the retooling of a large assembly facility for clean vehicles, as GM is now essentially the anchor customer for a wide and deep supply chain for electric power train components that includes both new Tier Ones like LG Chem and long established suppliers such as BorgWarner/Delphi, Continental, American Axle and others. As the engineering talent built into those supply chains appears to be settling in Michigan, other OEMs are arriving, including Rivian, who has set up a design center in Livonia and Bollinger, and another E-truck start-up in Ferndale.
Detroit’s nickname Motor City will still be appropriate in the 2020s—except the motors will be quiet, clean and electric.