Poletown plant is saved, but it comes at a price for the city

Although the Poletown plant has been saved, it will be shut down for as long as two years for retooling. That will result in a financial pinch for Hamtramck.

By Charles Sercombe
The UAW strike at GM is now over.
And the Poletown plant will remain open.
That’s the good news.
The bad news? It’s complicated.
Although the Poletown plant was spared from being shut down, it will be out of commission for 18 to 24 months while it retools for the production of electric-fueled pick-up trucks.
That means there will be a major financial setback for the city.
Why?
GM has a special arrangement with the city whereby, in lieu of paying taxes, it has a payment formula that is based on the number of workers employed at the plant and the number of hours they work.
For the last five years, Hamtramck has received about $700,000 a year, according to the terms of that deal. That’s not a bad chunk of change for a plant that has only a small portion located on the Hamtramck side of the Detroit border.
But this past year has been different. There have been fewer workers employed at the plant. GM pays the city every June, and the 2019 payment was about $100,000 less than usual because shifts were reduced.
Next June’s payment will be even less because of the UAW strike, and the upcoming new production system that has to be installed. After that, there won’t be much collected while retooling is underway.
GM is investing $3 billion into the plant.
The delay in production means Hamtramck will likely not receive significant payments from GM until 2022.
In the meantime, the city has to brace for a major financial hit to the budget.
Angerer said her staff has adjusted this year’s city budget to absorb the financial setback – which so far meant going into deficit spending.
How the city will absorb the future financial setback is not clear. It’s also not known how many workers will be employed at the newly retooled plant.
For UAW members, the financial picture is better. The new labor contract gives them a 3-percent pay raise, and also an $11,000 bonus for ratifying the contract.
The deal also offers a pathway for temporary workers to become full-time.

Nov. 1, 2019