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OnStar to Move into Ren Cen


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TOM WALSH: OnStar to move into the RenCen

It's 3rd high-tech firm going downtown lately

December 4, 2003



General Motors Corp. will move its OnStar Corp. subsidiary into Renaissance Center Tower 400, relocating about 900 workers from Troy to the GM mother ship in downtown Detroit.

A formal announcement to OnStar employees is expected today, according to people familiar with the deal. A GM spokeswoman would neither confirm nor deny the move Wednesday.

OnStar will become the third high-tech employer to relocate a significant number of employees to downtown Detroit -- providing another big boost to the city's revitalization efforts. EDS Corp. decided to move 1,500 workers into Tower 500 of the RenCen last year, and 4,100 Compuware Corp. employees occupied their new downtown headquarters this year.

OnStar is the country's leading provider of in-vehicle communications systems, which more than 2 million subscribers use to call for help or get directions at the touch of a button.

The OnStar system is available on 50 GM models and in a half-dozen other automakers' vehicles.

Founded in 1996, OnStar's current headquarters is at 1400 Stephenson Highway in Troy, near I-75 and Maple Road.

GM bought the Renaissance Center in 1996 and has renovated it for use as its corporate headquarters. GM occupies three of the four main towers, with other tenants such as major law and accounting firms in Tower 400.

Commercial real estate brokers said GM has been trying to lease about 70,000 square feet of vacant space, or about 13 percent of the total space in Tower 400, for $23 per square foot. That's probably not enough space to house 900 new OnStar employees, but one major Tower 400 tenant is expected to move to another downtown location when its lease expires in 2005, which suggests that the OnStar move may be phased in during the next couple years.

Since its inception, OnStar has positioned GM as the industry leader in telematics, the new-age term for two-way wireless communication in vehicles.

So far, OnStar has turned in mixed results in terms of sales and profits. Priced as a $1,000 option in early Cadillacs, it was lowered to $695 as GM expanded the number of vehicles offering it. In addition, the customer paid monthly fees, much like a cable TV subscription, ranging from $17 to about $70 a month.

The number of OnStar subscribers hit a plateau after rapid early growth, and reports on renewal rates for OnStar subscribers have ranged from as low as 20 percent to as high as 60 percent. GM doesn't reveal the actual data.

Recently, OnStar's fortunes have appeared to be turning up.

GM Vice Chairman John Devine told financial analysts in February that OnStar was turning a profit for the first time.

A new advertising approach has recently helped to boost subscriber volume and customer retention, GM has said, without providing numbers.

Earlier ads used a Batman character to find the nearest gas station, but a radio campaign lunched a year ago focused on safety and security, using actual OnStar calls for assistance. The "real stories" radio campaign was the model for a 30-minute TV info-mercial that debuted last month on HGTV. Called "Tales from the Road," it, too, uses real-life OnStar subscriber stories to tout a message of safety, security and peace of mind.

Contact TOM WALSH at 313-223-4430 or [email protected].

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