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GM Aims to Break Barriers With Chevy Sonic

Stocks in this article: F GM

DETROIT ( TheStreet) -- For the moment, the Chevrolet Sonic symbolizes all that is inspiring about General Motors' (GM) rebirth.

When production starts in the third quarter in Orion, Mich., Sonic will be the first sub-compact built in the U.S., and the first small car GM has built in the U.S. since Chevette production ended in 1986.

Sonic's principal competitors -- the Ford (F) Fiesta, Honda (HMC) Fit and Toyota (TM) Yaris --- are all built offshore.

"GM has made a commitment to build small cars," said Alicia Boler-Davis, plant manager at Orion as well as vehicle line director, with overall authority for Sonic, in an interview. "We understand that it's a growing segment in the market, and we've got a great team effort working with UAW that allows this to happen. It's a team effort, from design to manufacturing."

Alicia Boler-Davis, Orion plant manager

Among the unique characteristics of the Sonic effort are a contract with the UAW that allows for a two-tier wage system and a management set-up, unique for GM, in which Boler-Davis, a 16-year GM veteran, not only oversees the product but also runs the plant where it is made.

"It's an integrated effort within GM," Boler-Davis said. "I have the engineering and the manufacturing. It's different in that one person owns it -- it's GM being innovative. We haven't decided to do this with any other vehicles."

The effort includes close collaboration and frequent consultation with the UAW within the plant, although Boler-Davis rejected a reporter's comparison to Saturn. "You can't compare it to Saturn," she said. "It's different."

The Orion plant, which will also produce the Buick Verano, will have about 1,550 employees; so far, about half have been hired and work has started on pre-production vehicles. GM is investing about $600 million to renovate the plant, which will also produce the Buick Verano. analyst Jesse Toprak agreed that GM's investment in Orion underscores the commitment to the sub-compact market. "They wouldn't have done it if they didn't have faith in the future of the segment, and I think it's a safe bet," Toprak said. "It doesn't seem like gas prices will come down dramatically anytime soon, and we've seen the subcompact segment become almost fashionable, where it used to be you bought one only because you had to."

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