Chrysler to Invest in City
Retooling of plant set for Phoenix v-6 engines

Deneen Smith
Kenosha News

Chrysler will announce a $450 million retooling of the Kenosha Engine Plant Wednesday.

The company plans to convert the newer portion of its facility at 5555 30th Ave. to build its new Phoenix V-6 engine line. It is the third site pegged by the company for the Phoenix as part of a $3 billion power train investment.

The announcement - which will include a pledge of state and local aid by Gov. Jim Doyle and local officials - is the culmination of more than a year of negotiations regarding the future of the automaker in Kenosha.

The aid package offered by state and local government is $16.8 million, including training assistance and forgivable loans used to upgrade the electric infrastructure powering the plant, according to a document distributed to Kenosha County supervisors.

According to that document, the new line will employ 700 people by 2015.

"This is a long-awaited announcement," said Matt Canter, Doyle's spokesman. "Under (the governor's) direction the entire administration has been working hard to secure this investment in Kenosha."

In a memorandum to the Kenosha County Board Monday, County Executive Allan Kehl said that as part of the aid package to the company, Chrysler is pledging 700 jobs tied to the new investment, including 500 Chrysler employees and 200 "partner company" jobs. The incentive plan is based on 700 jobs over a five-year period from 2011 to 2015.

While the plan saves the Kenosha factory, it will ultimately mean fewer jobs at the plant, which currently employs about 950 people.

The company would not reveal details of its plan Monday. However, sources said the plan would retool the newest portion of the plant, now building the 3.5-liter V-6, and would not include a physical expansion of the building beyond its current site.

For workers at the plant, who learned they would get the Phoenix Monday morning, the announcement comes after months of hope and worry.

Because the Phoenix will eventually replace all four V-6 engines currently built by Chrysler, including the two now made in Kenosha, the future of the Kenosha plant would have been dim if it hadn't secured the new engine line.

"The membership, they are the ones that made this happen," said United Auto Workers Local 72 president Dan Kirk. "They are the ones that even gave us the ability to sit across the table and discuss it.... It was the people on the floor that made it happen."

Plant workers' production history and strong union-company relationship at the factory have made it a strong contender for company investment.

When Chrysler spent $624 million to expand the factory and build the 3.5 line in 2003, plant workers were instrumental in putting the new line together, including taking the unusual step of installing the new line themselves, rather than bringing in outside contractors to do the job.

Kirk said details on the construction schedule and how that will affect staffing and scheduling at the plant will come later.

Chrysler's consideration of Kenosha County for a new engine plant came to light last April when Local 72 signed an agreement outlining new, more flexible work rules for the new plant.

The company was working last year with state and local officials on a plan for an entirely new $534 million plant on a 223-acre site in Somers. If built, that plant was expected to eventually replace the existing factory.

Since talks about the program began last year, Chrysler's fortunes have changed dramatically. After having a strong sales year with the launch of new products like the Chrysler 300, the company - merged with Daimler-Benz in 1998 and renamed DaimlerChrysler - struggled financially through the balance of 2006, causing Daimler to sell Chrysler last month to private equity firm Cerberus Capital Management LP.

With that new financial landscape, Chrysler told local officials in February it was abandoning the Somers plan. The company said it was shifting its sights to retooling the existing plant.

State and local officials had been offering a complex $18 million package of incentives for the Somers plant, including training, infrastructure improvements and aid in purchasing the site. According to details released when that aid package was being considered by the county, the Somers factory would have employed 450 people.

Kehl said Monday the new plan includes $1 million in aid from the county and $2 million from the city. That funding will go toward upgrading the power grid to the plant. He said the county will issue bonds to secure the $1 million. For the Somers plan, the county had approved issuing $5 million in bonds for the aid package.

When the Somers plan fell through, Kehl said, "we focused right away" on the new plan. He said he believes the new plan is a better one for the county, securing the jobs with a smaller incentive cost and without leaving the city with a 100-acre brownfield site on 30th Avenue.

"I think if you have strong feelings and you make a commitment, good things can happen, and this is the result," Kehl said.