DETROIT -- The only subcompact car being built on U.S. soil will soon roll out of an assembly plant in suburban Detroit that is as unusual as the car itself.

The production line has been squeezed into half the space of a traditional plant.

Welding robots are concentrated in clusters instead of being spaced along the line, and many of the employees are paid half the typical union wage.

Even the first coat of rust-proofing has been reformulated so that it is one-hundredth as thick as -- and thereby cheaper than -- the coating on other cars.

One of the oldest axioms in the auto industry is no company can build a subcompact car in the United States and make money because the vehicles are priced too low.

The Ford Fiesta is built in Mexico. The Honda Fit is made in several places, including China and Brazil.

But with Americans -- and Detroit -- rediscovering small cars because of high gasoline prices, General Motors Co. is intent on shattering that notion with its new Chevrolet Sonic.

Not only does it give GM a new entry in the lowest tier of the market when it goes on sale this fall, the Sonic is expected to be a breakthrough in establishing a new level of cooperation between the industry and the United Automobile Workers.

The radically revamped factory in Orion Township, about 30 miles northwest of Detroit, operates with fewer and cheaper employees, many of whom are paid $14 an hour, compared with the full UAW wage of $28 an hour.

Company executives modeled some parts of the plant after GM's most efficient factories in Germany and South Korea.

The production line's footprint alone was reduced from 1 million square feet to 500,000 -- the equivalent of losing the space of more than two Walmart supercenters. The energy bill was cut by powering some operations with methane gas from neighboring landfills.

The Sonic will be GM's littlest, and most fuel-efficient, conventionally powered vehicle. It was conceived in 2008 before the federal government's bailout of the bankrupt automaker, when negotiators from the company and the union began brainstorming about what it would take to make a profitable subcompact car in the United States rather than in low-wage countries.

"We wanted to prove we could do it," said Diana Tremblay, GM's head of labor relations, "and we went into it with an open mind."

The UAW tried to persuade Ford Motor Co. to build the Fiesta subcompact in the United States. But Ford chose a plant in Mexico, where the combined wages and benefits of a production worker total less than $10 an hour.

By contrast, a full-wage union member in the United States costs GM close to $60 an hour. Even an entry-level wage employee costs about $30 an hour in wages and benefits.

Although employment costs are not the only factor in producing a profitable subcompact, they were critical to the decision to build the Sonic in Michigan.

In a groundbreaking labor agreement, the union allowed GM to pay 40 percent of its union workers at Orion Township an "entry-level" wage.

The UAW's president, Bob King, said the union considered a competitive subcompact's significance to GM's overall product lineup.

The Sonic is the first subcompact that GM has tried to build in its home market since the Chevrolet Chevette almost 40 years ago, aside from a brief joint effort with Toyota Motor Corp. to build Geo Prisms.

The smallest car in its lineup now is the Chevrolet Aveo, a subcompact developed by GM's South Korean subsidiary. "We are committed to the success of the company," Mr. King said recently. "We had to talk about a business model that makes sense."

"GM has a lot to prove with the Sonic," said Joseph Phillippi of the research firm Auto Trends. "They have to cut costs but still put out a competitive car." Previous efforts such as the Geo Prism and the Aveo were bland and underpowered and contributed to GM's lackluster reputation in the overall car market.

The car itself is a mosaic of innovations to make the Sonic lighter, less costly, and more fuel-efficient. They include high-strength steel in its windshield pillars and the ultra-thin rust-prevention film. The Sonic sedan resembles a shrunken version of the Cruze, while the hatchback version is distinguished by its short rear overhang and upright stance.

The Sonic weighs 500 pounds less and is 8 inches shorter than the next-biggest car GM makes, and its 1.4-liter turbocharged engine will deliver the best gas mileage in the company's fleet.

"It will be north of 40 miles per gallon," said Jim Federico, head of GM's global small cars and electric vehicles.

The Orion Township plant where it will be made opened in 1983, and in the 1990s built big cars, including the Buick Riviera. It nearly closed two years ago, when three other large assembly plants were shut down to reduce capacity.

GM spent $545 million to buy equipment for the plant and retrain employees. The factory produces 80 percent less solid waste and uses 20 percent less water than a typical GM assembly plant.

Various stages along the assembly line, such as the body shop and trim area, are more compact than in a typical factory, with teams of six employees installing parts fed to them on automated carts by independent suppliers who operate inside the plant.

That reduces costly inventory and improves productivity.

"Normally the suppliers would be five miles away versus 50 feet," said John Barry, a GM manager.

The plant overall employs 1,800, a reduction of 25 percent.

To augment the small profit that the Sonic generates, the plant will also make the larger, more upscale Buick Verano on the same line.

Every dollar saved is essential to the Sonic's ability to compete, auto experts said. And if the car is a winner with consumers -- production is to begin in August -- Orion Township could become a model.

"This plant has the potential to redefine American manufacturing," said Harley Shaiken, a labor professor at the University of California, Berkeley. "A success here indicates untapped capabilities."

First Published July 17, 2011, 4:15 a.m.