Shuttered GM Plants Receiving Inquiries from Interested Parties

General Motors (GM) is still hard at work attempting to offload nearly a dozen shuttered assembly and component factories, according to a report by the Detroit News, and plans on stepping up efforts in September to sell the facilities. Al Koch, chief restructuring officer at Liquidation Motors (what used to be the "old GM" that is still in bankruptcy court), says that there are several interested parties who have toured a number of old GM facilities. Koch's main responsibility is to oversee the liquidation of the unwanted assets that GM left behind in bankruptcy court; the proceeds of those sales would go to pay off GM's creditors. Those creditors are owed billions of dollars from the holdings they had when GM wiped out its debt, but they are likely only to receive pennies on the dollar for their interests. In total, GM is attempting to unload 127 properties, which include 15 factories, a church, vacant land, several homes, and landfills. A total price tag on the value of the properties was not made available by GM.

The challenge of selling GM's old facilities is considerable, as many of them are larger than most buyers want, are ageing, or are even polluted and will require considerable sums of money for clean-up. Koch did not specify in which of GM's facilities the outside parties are expressing an interest, but several assembly facilities have been shuttered by GM which may be included in the list. Koch said that a developer is interested in the Buick City facility in Flint (Michigan), with the possibility of investing US$25 million to turn it into an intermodal transit hub. Other possible sites of interest include GM's Pontiac (Michigan) Assembly, or assembly facilities in Wilmington (Delaware), Moraine (Ohio), or Shreveport (Louisiana). Koch does not yet know if the inquiries on the sites by other organisations, which include other automakers, will lead to any offers or sales. "It's not possible, until the process unfolds for a little bit, to tell the shoppers from the buyers," Koch said. "These are very, very large facilities. So the likelihood of finding a single user at any of these industrial sites—it's not impossible—but it's a relatively small buyer universe." In some cases, inquiries have reportedly been made through the U.S. government or to Liquidation Motors directly. "In one case, one user wants to see three of the locations," he told the News.

There has been some success already in converting GM's old holdings. GM's former Centerpoint complex in Pontiac has been sold to a company which will be turning it into a US$54-million movie studio, taking advantage of the significant tax credits that the state has made available for film production. GM sold a facility in 2007 as well to an investment trust in New Jersey, that is turning a former assembly plant into a mixed industrial and retail development. Word has also come that investors have toured the Moraine (Ohio) plant several times with the idea of possibly subdividing that facility as well, turning it into a multi-use industrial complex.

Outlook and Implications

Of the potential parties supposedly interested in the various facilities, the most interesting may be the mention of automakers—but no automakers have specifically been named by GM. This begs the question of whom might be interested in acquiring one of the shuttered plants. Chinese military equipment maker Sichuan Tengzhong has been in talks with GM about acquiring the Hummer brand, but it is uncertain as to whether or not that would also include the Shreveport (Louisiana) plant that builds the most popular Hummer, the H3 (Shreveport also builds GM's mid-size pick-ups, the Chevrolet Colorado and GMC Canyon). Indian automaker Mahindra & Mahindra is also thought to be interested in finding a plant in the United States in which to build their compact diesel-powered pick-ups, thereby avoiding the 25% "chicken tariff" that the United States imposes on all imported pick-up trucks. Several facilities might suit Mahindra's needs, but again, many of these GM facilities are too old or too big—there are valid reasons why GM decided to abandon these plants in bankruptcy court. Electric automaker Tesla has also been looking for a plant to refurbish to build its upcoming Model S sport sedan, but again, these plants are too big for Tesla's purposes. That automaker needs no more than a million square feet at the most; most of these plants are nearly four times that volume. And there is no logical reason for Chrysler to be mentioned as an interested party, as that company has more than enough capacity in its own underused plants to fulfil any expansion plans that parent Fiat might have for it.