Chrysler Will Close Plant in Wisconsin, Idling 5,500
Chrysler Corp. announced plans Wednesday to close the nation’s oldest auto factory, a converted 19th-Century bicycle plant in Kenosha, Wis., that has managed to survive the ups and downs of the American automobile business since 1902.
About 5,500 jobs will be eliminated in Kenosha, a city of 78,000 that has enjoyed a modest economic revival in recent years and had welcomed the decision last year by Chrysler to acquire stumbling American Motors Corp., owner of the Kenosha facility.
The decision immediately triggered charges of betrayal by Wisconsin political leaders, who have been providing financial help to Chrysler.
Wisconsin Gov. Tommy G. Thompson charged that Chrysler had reneged on a pledge to keep the manufacturing complex open for at least three more years. The auto company has spent more than $3 million in state funds to train workers at the plant.
“Lee Iacocca and Chrysler are turning their backs on their commitment and I am outraged,” Thompson fumed. “I am not going to take this lying down.”
Chrysler officials denied there had been any promises and called the shutdown an inevitable result of its 1987 acquisition of American Motors Corp. and the unneeded capacity that came with the package. The only question had been which of AMC’s assembly plants it would have to close.
“As far as we’re concerned, there was no firm commitment,” a Chrysler spokesman in Detroit said.
Chrysler, which had already announced plans to close a 500-worker parts plant in Milwaukee this spring, said it will keep open its engine plant at Kenosha. That facility employs 1,000.
The assembly complex being closed has been the chief source of automobiles for American Motors and its corporate predecessors, which embraced such familiar U.S. industrial names as Nash, Kelvinator, Hudson and Kaiser.
The main assembly plant began building the one-cylinder Rambler in 1902 after the building was acquired from a bicycle maker by Thomas B. Jeffery & Co., one of the prominent early auto companies. In 1917, it built the first Nash, after the company was bought by Charles W. Nash.
After George Romney’s version of the Rambler took the auto market by storm in the late 1950s, the company expanded by leasing a nearby, vacant Simmons mattress factory that helped drive capacity to 600,000 cars a year, making it one of the biggest auto plants in the world. But the company’s fortunes withered and the plant never reached capacity, according to John A. Conde, automotive historian of Detroit.
Renault Took Control
While AMC’s more successful Jeeps were assembled in Toledo, Ohio, the Kenosha plant turned out such marginal autos as the Matador, Gremlin and Pacer during the 1970s before French auto maker Renault took control in 1980. Renault spent more than $200 million to modernize the Kenosha plant so it could build the French-designed Alliance subcompact.
By last year, however, the popularity of the Alliance had dwindled to the point where AMC was projecting sales of a mere 30,000 to 40,000 a year, and the vehicle didn’t fit Chrysler’s auto plans, either.
Conde said the Kenosha plant is the oldest continuously operating manufacturing plant of any type in the United States and, as far as he has been able to determine, in the world. But that will now end unless someone buys it, an outcome few expect.
“I can’t imagine what for,” Conde said.
Though Chrysler began operating the assembly plant only after it acquired AMC, some of the plant’s excess capacity had already been used for production of Chrysler cars by American Motors on a contract basis.
Added Dodge Omni
When Chrysler completed its acquisition of American Motors last August, it immediately suspended production of the Alliance. It then added the Dodge Omni and Plymouth Horizon to three others--the Plymouth Gran Fury, Chrysler Fifth Avenue and Dodge Diplomat--already being assembled in Kenosha.
Donald Holland, city administrator of Kenosha, said Wednesday that “we have it in writing” that Chrysler promised to build those vehicles in Kenosha for as long as there was demand in the marketplace. That was expected to be three to five years, Holland said.
However, Wednesday’s announcement calls for transfer of Omni and Horizon production to another aging Chrysler plant, a Detroit facility that the company has promised to rebuild. The other makes will either be discontinued or transferred someplace else, Chrysler said.
“We had to close the Kenosha assembly and stamping operations to keep competitive in what has become a shrinking U.S. automotive market,” said Gerald Greenwald, chairman of Chrysler’s car-building unit.
Kenosha Spent $700,000
Holland said the city spent $700,000 on various public improvements related to the auto manufacturing complex in the last year “based on Chrysler’s commitment. Realistically we can’t force them to stay, I suppose, but we’ll seek recovery of the investment we made.
“Chrysler apparently let dollar signs get in the way of the commitment they made. It’s very disquieting to see business operate that way. If government operated that way, we’d be hung from the nearest yardarm.”
Holland said the closing will slam the brakes on what has been a general economic improvement in the region--a reflection of the improved outlook for U.S. manufacturers generally. Unemployment in Kenosha, an industrial town south of Milwaukee, has fallen below 7% from the 14% range that prevailed in the early 1980s.
Such employers as Snap-On Tools Corp., American Brass Co. and Jockey International Inc. remain, said Holland, adding: “Until today’s news, we were doing very well. . . . When you lose 5,500 jobs in a city of 78,000, that is as close to disaster as you can get.”
Inefficient Despite Robots
Whatever Chrysler might have promised, the Kenosha complex is known in the auto industry for being inefficient, despite all of the robots and other state-of-the-art manufacturing hardware that had been jammed into it in recent years.
The complex itself is a patchwork of five buildings, one of which is two miles from the others. Another is the engine plant, which makes engines for vehicles assembled in Michigan, Ohio and Ontario, but not in Wisconsin. The main assembly plant still has some wooden floors, and the low ceilings limit the types of manufacturing systems that can be used.
The operation was also plagued by a labor agreement that United Auto Workers leaders conceded was especially burdensome, with complex work rules that heaped extra costs on the factory. As recently as three years ago, one UAW official recalled, the Kenosha plant had a union shop steward for every 20 workers on the assembly line compared with a ratio of one to 250 at General Motors.
But in almost continual negotiations over the last few years, the Kenosha workers have agreed to eliminate most such provisions and to embrace the kinds of plant-floor efficiencies that the union and auto company management are establishing to better compete with cars from Japan and Korea.
“They have gone along with the whole program, and that is part of their resentment now,” the UAW official said.
However, union President Owen Bieber issued a statement Wednesday that blamed not Chrysler but the nation’s trade policies and lack of an industrial policy. Bieber noted that the closing is neither the first nor the last as the U.S. industry loses ground to foreign-based auto companies building cars abroad and in this country as well.
Related story in Business.