Fenton plant losing a shift; state may revoke tax breaks

FENTON, Mo. -- After DaimlerChrysler announced plans Wednesday to cut jobs at the suburban St. Louis plant where it makes Dodge and Chrysler minivans, Missouri officials said they may revoke tax cuts granted to the company.

About 1,300 workers will lose their jobs in Fenton, government leaders said. That's about one-tenth of the 13,000 job cuts announced by Chrysler in a nationwide restructuring plan aimed at returning the automaker to profitability by next year. Chrysler said it will eliminate a shift at the South assembly plant in 2008. The plant, one of two Chrysler plants that sit adjacent to each other in Fenton, employs about 2,850 workers. Just more than a year ago, Chrysler officials came to Fenton and announced plans to invest more than $1 billion there. State and local officials promised the automaker up to $78 million in tax incentives to lure the investment.

Fenton Mayor Dennis Hancock said city tax breaks will stay in place because Chrysler officials promised Wednesday they would continue with the upgrade and investment.

State officials are examining whether the automaker still qualifies for tax breaks offered by the Missouri Department of Economic Development, said spokesman Spence Jackson.

"Those incentives have not yet been given to the company and we are going to reevaluate that offer in light of today's announcement," Jackson said in an e-mail.

"I am deeply disappointed that the St. Louis South facility was included in these reductions and I want these outstanding employees to know that their state government will be providing assistance to help them secure new employment or access to job training programs," Gov. Matt Blunt said.

The news could have been worse for Fenton.

Workers were worried Chrysler might completely close the North assembly plant, which makes Dodge Ram pickups. Truck sales have slowed nationwide due to high gas prices. Instead, the company left the Fenton truck plant unscathed and cut a shift at its truck plant in Warren, Mich.

Along with the shift cuts in Warren and Fenton, Chrysler announced it will close a plant in Newark, Del., in 2009. A parts distribution center near Cleveland also will be closed.

Jim Gideon, 36, works at the Fenton truck plant. He was happy his job was spared, but worried the company would eventually make even deeper cuts.

"As far as relief goes, there's no relief in this game," said Gideon, a 12-year employee of the plant. "It's feast or famine."

Chrysler's investment in the minivan plant will upgrade the facility to a so-called "flex plant" that can make more than one model of vehicle. The technology will let Chrysler adapt to customer demand much more quickly than in the past.

Between 10 and 15 new auto parts companies will move to Fenton to supply the newly renovated plants, said Hancock. The new companies should add about 1,000 jobs, and might hire some of the workers let go from Chrysler, he said.

"Ultimately that investment will make both Fenton plants viable for the foreseeable future," the mayor said.

Fenton agreed to give Chrysler a $46 million property tax break over 20 years to invest in the plants, Hancock said.

The tax breaks are granted as Chrysler installs new equipment, and the incentives will remain in place as long as the company continues it's investment, Hancock said.

Missouri granted Chrysler $32 million in tax abatements and other incentives.

The automobile industry in Missouri employs about 36,500 people. The average autoworker in the state earns more than $53,000, while the average Missourian earns about $35,000. Missouri ranks sixth in employment related to the auto industry.

The St. Louis region also took a hit last year when Ford Motor Co. closed its assembly plant in Hazelwood, leaving about 1,000 autoworkers without jobs. The Hazelwood plant was among 14 Ford shuttered as part of a restructuring plan of its own.

Under the Chrysler plan, 11,000 production workers -- 9,000 in the U.S. and 2,000 in Canada -- will lose their jobs over the next three years, and 2,000 salaried jobs also will be cut -- 1,000 this year and 1,000 in 2008.

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On the Net:

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