GM's $1 billion investment fuels Warren's comeback

WARREN, Mich. – One of the truisms that came from the General Motors bankruptcy was the fact that the former number one automaker unintentionally became a healthcare company that just happened to build cars.

It wasn't my saying, although I wish I'd come up with it. If memory serves it came from a Bloomberg News story during the turnaround era, but it's one of the best descriptions of how GM lost its way over the years as the Japanese automakers entered the U.S. market and GM responded ever so poorly.

Legacy costs had so bogged down the company that it was spending any money it could scrape together to pay the healthcare and pension obligations and the car-making side of the business suffered.

Mary Barra's new mantra since taking over as CEO is "no more crappy cars," an admission finally, that GM had gone astray long ago and it can't expect to seriously compete building substandard vehicles. Not in the bare-knuckle global auto industry of today. Barra's blunt words also underscore an understanding that if GM ever does fail as miserably as it did in 2009 the government is not likely to jump in and bail it out again.

Let's make that the backdrop on an event that happened in Warren 60 years ago this week. GM cut the ribbon on the new 326 acre Technical Center. That even included a video address by President Dwight D. Eisenhower. GM didn't just design cars and trucks back then at this site. It researched medical device construction, did new tank design, and even rolled out railroad cars here.

The Tech Center was, for its time, the foremost private research and development center on the planet. GM proudly spent a boatload and commissioned a famed architect by the name of Eero Saarinen design the place with ultra-modern buildings. They also had a landscape architect Thomas Church lend his talents to making an amazing campus, which included what you might call the original infinity pool!

Over the years GM designed, with the vision of Harley Earle, some amazing vehicles like the "Buick Y-Job", the Jet Car and perhaps his most memorable contribution to automotive history; tail fins!

But those were the good old days, it wasn't too long after that GM green-lighted dogs like the Vega and its Pontiac-made sister the Astre. [For full disclosure I did a full 360-spin out in my dad's 1975 Astre in an ice storm driving home one New England early morning and never wanted to drive it again because of its poor handling! Dad sold it not long after] There were other gems like the Cadillac Cimarron and the Chevrolet Citation. Those were the bad old days.

From there it was a steady slog into bankruptcy. During these times, GM engineers learned to live with the Tech Center's original buildings. After looking at the old pictures of the original building and having been through the place hundreds of times over the past 20 years, I can tell you much of the facility has not changed a lick.

Classic architecture is just that and there are some really cool looking parts of the facility. But, when GM needed cash to pay pensions and healthcare they weren't putting money into the Tech Center and it became a place where staff learned to make do.

The folly of that policy reared its ugly head when the Michigan skies opened up and nearly drowned the place with about 30 million gallons of water last summer. Much was damaged and GM learned it needed to spend real money making the place world class, instead of a world classic.

To be completely fair, since GM's cleared bankruptcy engineers in the Tech Center, despite what had become deteriorating facilities, designed the world class Impala that changed the game in the sedan segment as well as the Colorado and Canyon mid-size pickup trucks, a long passed-over market segment GM has since conquered quite nicely.

Now, GM will completely overhaul its Tech Center as a way to take its design center into a new and vital realm. GM will do its basic car architecture design here, and that means flying in engineers from all over the world to tailor base vehicles for their local market. This will require hotel rooms, loft apartments, and a different kind of economic landscape for the neighborhood.

There is talk of a 5-star hotel that would house temporary GM employees and suppliers across the street. There will be a new Cadillac dealership across the street soon and the entire neighborhood will be buoyed by the cash infusion GM will make here.

All this tells us a lot. First, that GM is healthy and seeing a bright future. Second, GM sees world class automotive talent resides here in Michigan so there is no need to go elsewhere to find it. Third, GM is serious about designing and building more game changing, world class vehicles.

This is all good news to a neighborhood along Van Dyke in Warren that has resembled a ghost town for a long time.

This is what the auto industry means to Michigan and we're all glad GM is back to being a true car maker again. This we know because Mark Reuss, GM's #2 executive and product development chief said today there is a strong likelihood GM will invest still more at the Tech Center in the future. He sees a strong future he's willing to invest in. It's been a long time in coming.

About the Author:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.