©2016 Michigan Economic Development Corporation

State Encourages General Motors to Stay in Lake Orion

Tuesday, November 13, 2001

Susan Shafer
(517) 335-6397

Michigan Competing for More Than 2,200 Jobs

Governor John Engler announced today that the General Motors (GM) Corporation has been awarded a Single Business Tax (SBT) credit by the Michigan Economic Development Corporation as an incentive to assign new products and invest in its Lake Orion assembly plant.

“The GM-Orion assembly plant has long been one of Oakland County’s largest employers,” Engler said. “By offering General Motors this tax credit, we are making a strong business case for the company to continue these manufacturing operations that are so vital for Michigan’s economy and to thousands of Michigan workers.”

The products GM produces in Lake Orion are planned to build out in 2004, rendering the plant idle unless other product lines are awarded to the facility.

The SBT credit, worth an estimated $59.5 million over 20 years, was offered in response to General Motor’s exploration of the possibility of transferring new product lines to another location rather than the Lake Orion facility.

“GM operates in an intensely competitive global market,” said Jerry Elson, corporate vice president and general manager of GM Vehicle Operations. “The viability of our manufacturing operations is dependent on continuous investments.Without the economic support provided by the state of Michigan and the MEDC, it would be very difficult to secure a business case that would allow GM to consider an investment of this magnitude for our Orion assembly plant.”

Other incentives are being offered to encourage General Motors to retain its Lake Orion operation and the more than 2,200 employees who work there. The state will provide an abatement of the six-mill State Education Tax. The MEDC is also making a recommendation to the Michigan Department of Transportation for up to $3 million for needed road improvements adjacent to the company’s site.

Orion Township is providing a 12-year, $17 million tax abatement for GM if they decide to continue the GM-Orion operation.

“We are thankful that the MEDC has awarded the General Motors Corporation a tax credit for the GM Orion Assembly Plant,” said Orion Charter Township Supervisor Gerald Dywasuk. “This is another critical step in the process of continuing production at these facilities, and continuing employment for workers at the plant and its suppliers.”

If General Motors decides to transfer new operations to Lake Orion it is anticipated that capital expenditures, which could exceed $275 million, would begin in 2003 and the retention of employees would begin in 2005, allowing for current production phase-out and future production phase-in. The retained jobs would pay an average weekly wage of $927, with benefit packages worth up to 30 percent of wages.

According to an economic analysis conducted by the University of Michigan, it is estimated that continuation of the Lake Orion operation would retain a total of 9,933 jobs in the state by the year 2022, including 2,288 directly by the company. The facility’s continued operations would result in total net state government revenue increases of $827 million through 2022.

The Michigan Economic Development Corporation, a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life.

GM-Orion Assembly
Economic Analysis
Summary Estimated
(All estimates in 2001 dollars)

Revenue Foregone$59,510,000
Revenue Gain$886,872,000
Average Wage$927/week
Personal Income Generated Over
Life of the Tax Credit Agreement

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