Chrysler plant closure a blow to Fenton
Tuesday, July 1, 2008
FENTON, Mo. (AP) -- People in this St. Louis suburb have conditioned themselves to accept bad news about the city's Chrysler plant, which has suffered its share of job cuts in recent years as gas prices have risen and auto sales have sagged.
But even against that gloomy backdrop, residents were still shocked on Tuesday, a day after learning that one plant will close and other will see production slashed.
"You could just sit down and cry over this," said resident Shirley Mize. "I think somewhere along the line, they thought this was going to happen. But I didn't think it was going to happen this soon."
Officials with the Auburn Hills, Mich.-based automaker said Monday the company will close its South plant here, which makes minivans, effective Oct. 31. The North plant, which makes full-size pickups, will be cut from two shifts to one effective Sept. 2.
About 2,400 jobs will be lost in all. The announcement comes after 1,000 jobs were cut at the South plant in November, when the company cut a shift there. It isn't clear if Chrysler will ever recall the 900 workers who will be laid off at the pickup truck plant. The two factories sit side by side.
Chrysler LLP President and Vice Chairman Tom LaSorda said the company has no plans to reopen the minivan plant. He said there's only enough minivan demand for three shifts, which the company already has running at its factory in Windsor, Ontario.
"We have too much capacity," he said, adding that the company had to reduce its factory capacity to remove fixed costs. "Those are the tough decisions we have to make, but that's the decision we did make."
Chrysler, which is owned by the private equity firm Cerberus Capital Management LP, is struggling along with other U.S. automakers to scale back production in the face of declining demand. Through the first five months of the year, Chrysler's sales were down 19 percent from 2007. There were with huge drops in larger vehicles, less fuel-efficient vehicles, with Ram pickup sales were down almost 27 percent when compared with the first five months of 2007. Sales of the Dodge Caravan minivan were down almost 35 percent through May.
Members of the UAW Local 110 here declined comment Tuesday.
Fenton Mayor Dennis Hancock said Chrysler's announcement was a surprise. But he remained optimistic the company would one day ramp up production at its Fenton facilities.
Chrysler invested $500 million in the South plant last year on new equipment. It is scheduled to invest an additional $500 million in the North plant during 2008, and hasn't told the city it has canceled the investment, Hancock said.
"What that tells me is that they could very easily bring new production here," Hancock said.
Economic ripples from the job cuts will be felt throughout the St. Louis region because most Chrysler employees live outside Fenton and commute to their jobs here, Hancock said. While union benefits will keep many workers paid for the near future, the economic uncertainty is sure to crimp their spending, he said.
"These are people that are not going to eat at restaurants," Hancock said.