DaimlerChrysler to invest $1 billion in suburban St. Louis plants

Tuesday, December 13, 2005

FENTON, Mo. -- It was a rare scene for today's automaking industry: executives and union leaders stood on the same stage and praised each other as DaimlerChrysler AG announced it will invest up to $1 billion in two Missouri factories.

"In all these years, there's never been anything like this," Fenton Mayor Dennis Hancock told a crowd of cheering employees at the factory during a ceremony Monday.

The investment will pay for modernization and retooling of the factories. The upgrades will begin next year.

Gov. Matt Blunt said Missouri helped land the investment by giving Chrysler $32 million in tax abatements and other incentives that will be paid out as the company changes its plants. Fenton city leaders already promised Chrysler local tax abatements that would save the automaker $24 million over 14 years.

Half of the state's incentive package must be approved by state legislators when they convene in January, said Paul Sloca, a spokesman for the Missouri Department of Economic Development.

Part of the incentive deal requires Missouri to pay Chrysler $16 million for job training programs, Sloca said. The money would come from a state fund controlled by the congressional Joint Committee on Job Training, Sloca said. The fund is allocated $5 million annually, and legislators will be asked to increase that amount by $5 million, Sloca said.

"We're confident that the legislature will come through for us," Sloca said.

The other $16 million in incentives come as tax abatements authorized under the Business Use Incentives for Large Scale Development tax credit program.

Chrysler's investment is welcome news for the St. Louis area, where other automakers have scaled back some operations over the last year.

Ford Motor Co. last year eliminated about 800 jobs when it ended a shift at its plant in nearby Hazelwood. General Motors Corp. closed a distribution center in Hazelwood last month, but also announced last summer it will invest $30 million at its plant in Wentzville.

Nationally, GM has announced it will cut 30,000 jobs and close nine plants over the next three years while Ford is expected to announce a restructuring plan in January that might include significant job cuts.

In Fenton, the Chrysler Group division of DaimlerChrysler makes Dodge Ram pickups and Chrysler and Dodge minivans at two plants. The North and South assembly plants employ 5,500 in the southwest St. Louis County town.

The automobile industry in Missouri employs about 36,500 people, Blunt's office said. The average autoworker here earns $53,117, while the average Missourian earns $34,855. Missouri ranks sixth in employment related to the auto industry.

Chrysler is spending the money at the plants to change the way it builds cars, adding more flexibility into the process so the company can react more quickly to changes in consumer demand, said Frank Ewasyshyn, executive vice president of manufacturing for Chrysler.

The new manufacturing process will bring about change for the plant's employees, said Glenn Woemmel, president of the United Auto Workers Local 110 at the plant.

Chrysler and the union have just begun labor negotiations over changes that might come as the plant is retooled, Woemmel said.

"I won't say there won't be some pain involved," he said, though he declined to elaborate on possible changes to the labor agreement.

Plant employee Bob Wennerker said coming changes to the manufacturing process are being accepted well by workers on the floor.

"It's going to be a cultural change with people and how they do things," he said.

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