Japanese Car Decision May Cost Belvidere Jobs : Illinois Town Fears End of Quotas
An hour’s drive west of Chicago’s O’Hare International Airport, deep in the farm country of northwestern Illinois, this quiet town of 15,000 hardly seems the place to find the front line in an international trade war between Japan and the United States.
But Belvidere is an auto town, and its people are just beginning to realize that Belvidere is about to become the first American community to feel the effect of last week’s decision by President Reagan not to seek an extension of import quotas on Japanese cars when they expire at the end of this month.
In fact, there is a better-than-even chance that Reagan’s decision will translate almost immediately into a loss of jobs and capital investment in Belvidere, and community leaders and workers alike are increasingly concerned about their town becoming a pawn in an international chess game.
“Whenever the President of the United States does what he’s done in the last week, there’s always going to be a possibility that I could lose my job,” says Larry Weber, a 43-year-old assembly-line worker at Chrysler Corp.’s big plant here, which is Belvidere’s largest employer.
Belvidere is more vulnerable than other auto towns because it is the only place where Chrysler makes its Dodge Omni and Plymouth Horizon subcompacts that compete directly with Japanese imports. Chrysler Chairman Lee A. Iacocca warned Washington earlier this year that his company will move its small-car production to Asia if a fifth year of quotas was not imposed.
Even before Reagan’s announcement last Friday, Chrysler said it would triple its imports of small cars from its Japanese affiliate, Mitsubishi Motors Corp.--thus reducing the need for Omnis and Horizons built in Belvidere--if quotas were allowed to expire. And now that a decision on quotas has been made, Chrysler officials are warning that the company might cancel plans to invest about $300 million in its Belvidere plant to produce an all-new, import-fighting small car, code-named the P-car.
“We know what products we have to produce in the next five years, we just don’t know where we are going to produce them,” Iacocca said recently. “Only this time I don’t mean which city or state, but which country.”
In a press briefing today in New York, Iacocca is expected to spell out Chrysler’s revised future product plans in the wake of the quota decision, and everyone in Belvidere is speculating about what Chrysler will do and fearing the worst. They believe that Iacocca will announce plans to build the P-car in Korea, leaving the outlook for the Belvidere plant very much in doubt.
“Iacocca’s a good poker player,” Weber says. “He said he would take the cars to Japan and Korea, and Reagan has called his bluff, so he’ll do it.”
Belvidere Mayor Gaius (Bud) Barr, who has been negotiating with Chrysler for five months to develop a package of local tax abatements and incentives to persuade the company to bring the P-car to Belvidere, doesn’t believe that Chrysler will abandon Belvidere if it doesn’t build the P-car there, but he’s worried that thousands of jobs could still be lost.
Barr and other local leaders believe that Chrysler either will continue to build Omni and Horizon models in Belvidere for another couple of years, until those aging models lose their sales appeal, or make the plant the second source for its popular mini-vans, which are now built only in Canada.
But both alternatives would probably mean fewer jobs for Belvidere; Barr says Chrysler would use only one shift of about 2,000 workers for mini-van production, cutting Belvidere’s current two-shift work force of about 4,000 in half. And if Chrysler just continues making Omni and Horizon models in Belvidere, it won’t modernize its plant as it would if it built the P-car there. Eventually, the Omni-Horizon models, and the 2.2-million-square-foot Belvidere plant, would become obsolete.
“If the P-car comes here, we will be working to get a Chrysler stamping plant to come here, too, and we would work with Chrysler to attract to the area companies that would supply parts to the P-car as well,” says Barr. “So the P-car could mean a lot to this area. But if it doesn’t become a reality, all those other things we are trying to do to develop Belvidere would go down the drain. You see, decisions like this have effects that mushroom over time.”
“If we don’t get the P-car, we’ll probably have much slower economic growth in this area than the rest of the country,” adds Gerald Grubb, state attorney for Boone County, which includes Belvidere.
Chrysler’s workers in Belvidere, many of whom voted for Reagan, are obviously more concerned about the effect of Reagan’s decision to lift quotas might have on Belvidere.
Reagan Backers Scarce Now
“The average guy in that plant voted his pocketbook, and last fall we were working overtime, the outlook was good, and people in the plant gave Reagan credit for that,” says Bill Louis, a 36-year-old assembly-line worker and a former official of United Auto Workers Local 1268, which represents Chrysler’s hourly employees at Belvidere. “But now, you can’t find anybody in that plant who will admit he voted for Reagan.”
“If we all lose our jobs, I’ll just have to say ‘Thank you, Mr. Reagan,’ ” adds Dave Woody, a 34-year-old material handler at Chrysler and a member of Local 1268’s executive board.
But with unemployment down to just 7.3% in Boone County last December, many civic leaders remain optimistic about the future of the local economy--with or without the P-car.
William S. Luhman, president of Growth Dimensions, an economic development group in Belvidere, says the city’s location on a major interstate highway, just 12 miles from Rockford and close to the outskirts of the Chicago metropolitan area, is attractive to business and will help cushion any shocks Belvidere suffers from a loss of Chrysler jobs.
He notes that most of Chrysler’s workers live in Rockford, not Belvidere, further reducing the effect that losing the P-car could have on the town. “Besides, even without the P-car, we think there will still be some kind of operation at the plant, so it won’t be completely negative,” Luhman adds.
Meanwhile, some leaders in Belvidere support Reagan’s decision on quotas and are convinced that most people in heavily Republican Boone County, who voted 2 to 1 for Reagan last year, still support the President. Even Belvidere’s local newspaper is opposed to extending quotas.
“It is not easy for us to say as a newspaper that we should end quotas, because everybody wants to hear the paper say, ‘Protect my job,’ ” says Patrick B. Mattison, president of the Belvidere Daily Republican. “It’s the same thing with the farmers around here, and the machine-tool companies in the area. But if we are going to be in the world economy, we’ve got to learn to compete, and if we curtail imports, it will just come back to haunt us.
“And even if Chrysler isn’t here to stay, they’ve got a very substantial facility here, and somebody else will use it. Maybe the Japanese.”
