By Robert Channick, Chicago Tribune –
BELVIDERE, Ill. — Three years ago, the American auto industry was not just in trouble, it was imperiled, with Chrysler facing the real possibility of running out of money unless it was rescued. General Motors also was on the ropes.
Both got government bailouts and took road trips through bankruptcy. Chrysler also got a new partner in Fiat, and all it takes to understand the impact is a visit to the Chrysler assembly line in this small town outside Rockford. This is where Chrysler’s Chairman and CEO Sergio Marchionne, who is also Fiat’s CEO, officially announced Thursday that the plant would add a third shift and 1,800 jobs by summer.
Joining Illinois Gov. Pat Quinn and a handful of union and local leaders on a makeshift podium, Marchionne addressed a cheering crowd of plant workers who will soon grow by two-thirds. He praised what will be the birthplace of the first true offspring of the Chrysler and Fiat union: the 2013 Dodge Dart compact.
“In 2009, when a new Chrysler emerged from bankruptcy, there was only one shift in this plant, and fewer than 200 people were working throughout this building, with little hope and tremendous uncertainty,” Marchionne said. “Today, we’re here to celebrate the start of a significant new chapter in this plant’s history.”
The move is evidence of a remarkable turnaround for the auto industry, including Chrysler Group, the smallest of Detroit’s automakers, which earned $183 million last year, its first annual profit in years. Ford, which didn’t need the government bailout, and GM also are making money again.
“It’s very significant,” said Michelle Krebs, a senior analyst at Edmunds.com. “When Chrysler went into bankruptcy, most of us didn’t think they would ever come out. When they did come out, most of us didn’t think they’d survive.”
The Belvidere plant will manufacture the 2013 Dodge Dart compact car alongside the Jeep Compass and Jeep Patriot, at least for a while. The Jeep vehicles are being phased out at the plant, with future production of one or both most likely shipped off to Chrysler’s Toledo, Ohio, facility, according to Krebs. Executives did not disclose the timing of Jeep’s exit, but said several new products are slated to join the Dart at the Belvidere plant, which has been retooled through a $700 million investment by Chrysler.
The Dart is the first Chrysler to be built on a Fiat-derived platform. The car, which is projected to get 40 miles per gallon and sell for about $16,000, is in pilot production now — a testing phase, according to executives. Volume production is expected to ramp up this summer.
About 500 of the new hires are being added specifically to build the Dart, while the rest will fill out the new three-crew system. The additional workers start in July and hiring has already begun, executives said. They will be paid the automaker’s new hire rate of $15.78 an hour, nearly half what longtime union employees make. The lower wages are possible because of recent labor agreements the car companies were able to negotiate with the United Auto Workers union, deals that help close the cost gap with Japanese and other foreign plants in the U.S. that operate with a non-union workforce.
When the hiring is complete, the Belvidere plant will have 4,500 employees.
The automakers’ renaissance is still unfolding. Car companies sold 12.8 million vehicles last year in the U.S., a 10.3 percent increase from 2010 and the most since 2008. Sales are expected to reach about 13.8 million this year.
That growth is pushing the need for more workers. Total payrolls at U.S. auto plants could reach 650,000 employees this year, a 10 percent gain, according to the Center for Automotive Research in Ann Arbor, Mich.
Completed in 1965, Belvidere produced the compact Plymouth and Dodge Neon from 1994 to 2005, when it was supplanted by the midsized Dodge Caliber, which ended its production run in December. It began producing the two Jeep products in 2006.
Illinois has kicked in more than $62 million to ensure continued production at Belvidere. That investment could end up being higher with the announced ramp up in hiring and production.
In 2010, Quinn offered Chrysler an incentives package for Belvidere that included $53.2 million in tax credits over 10 years, $875,000 in training funds, a $3.5 million grant and $4.6 million in additional state and local incentives through the Enterprise Zone program.
In return, Chrysler said it would invest $603.8 million in the plant. Marchionne said Thursday the company’s investment has grown to nearly $700 million, providing the plant with new machinery, tooling and handling equipment, and a new 638,000-square-foot body shop to support production of the Dart.
Now that the company is hiring, it will receive additional tax credits per every new full time worker.
“As the Dodge Dart creates more jobs, the incentive may be a little more beneficial, because it’s all based on job creation,” Quinn said Thursday. “If the company creates more jobs than expected back then, it will be more of an incentive.”