Chrysler's Project X

Detroit to Delaware, job losses spell pain

Anxious workers across U.S. brace for today's decisions on cutbacks.

David Shepardson / Detroit News Washington Bureau

NEWARK, Del. -- At the Dodge dealership here, there's no better evidence of the troubles facing DaimlerChrysler AG's Chrysler Group than the rows of unsold Dodge Durango SUVs, which are built down the road at Chrysler's Newark Assembly Plant.

Next door at City Hall, 83-year-old retiree Harry McHenry stepped out of a Honda Accord on Monday in a parking lot filled with foreign cars and summed up the prospects for the factory's 2,000 workers. "I wouldn't want to be in their shoes today or working in manufacturing," McHenry said. "The big SUVs are too expensive to fill up."

When Chrysler announces its widely anticipated restructuring plan today, it is expected to call for cutting at least 11,000 hourly and salaried positions and the closure of at least two U.S. factories, including Newark Assembly. The plan Chrysler calls Project X is designed to transform Chrysler into a leaner, more competitive company that will thrive by working more closely with German sibling Mercedes-Benz to develop vehicles.

Chrysler declined to comment Tuesday on the restructuring.

The plan may save the automaker but only by forcing a painful reality on workers and communities from Detroit to Windsor to Newark.

"The public gets to make the decision whether we stay open by what they buy," said Lee Cross, 45, who turned down the Marine Corps at age 18 and went to work at Newark Assembly. The forklift driver has 27 years seniority.

"If the plant closes," he said, "it's going to have a big impact on this town."

At Malin's Market and Deli, co-owner Kenneth Malin said business could drop 5 percent to 7 percent if the factory is shuttered. "Chrysler's just like any other business. If their costs exceed revenue, they have to do something," he said. "Obviously, people have moved away from big SUVs."

Plant has cut shifts

Since July, the plant has been on a one-week-on, one-week-off rotation. That's given Dana Benson plenty of time to worry about her future.

"People have been on edge for weeks, waiting and waiting," said Benson, a 41-year-old mother of one with 16 years at Newark. "There's been a lot of crying, a lot of people worried about losing their homes and worried about what they would do next."

Chrysler is not alone in mothballing factories.

The scenario will be repeated all over the United States in the next few years as the auto industry retrenches. Bankrupt auto supplier Delphi Corp. wants to close 21 of its 29 U.S. plants, while Ford Motor Co. plans to close 16 plants by 2012 and General Motors Corp. expects to finish shuttering 12 factories by the end of next year.

Today, Chrysler has 25 U.S. factories, including 10 assembly plants, compared with 54 in 1954.

Closing Newark Assembly will end 50 years of vehicle production at the sprawling 3.4 million-square-foot complex that houses 17 miles of conveyer belts. Then-Chrysler Corp. opened the plant in 1951 on 271 acres of farmland to build Patton tanks for the Korean War.

"It's not the fault of the workers. People are demanding cars that get better fuel economy and they're only building a full-size SUV," Newark Mayor Vance Funk said in an interview.

It's the biggest taxpayer

Newark, a blue-collar town on the Interstate 95 corridor near the Maryland border, was established in 1758 by King George II as a farming community.

The city's Web site features the slogan "Experience Newark: You'll Never Want to Leave."

The population of 16,000 expands to 34,000 with the addition of full-time students at the University of Delaware. Chrysler is its largest taxpayer, even though its property and sewer taxes amount to about $550,000 -- a small percentage of the town's $30 million budget.

Newark has seen a number of factories close over the years -- one site was used by the university to build dormitories -- and has fallen on hard times recently.

Avon Products Inc. said last month it will close its distribution branches just outside Newark in mid-2009, eliminating more than 300 jobs. Chase Manhattan is eliminating 200 jobs following its purchase of Bank of New York. And now Chrysler.

Factory first built Fury

The automaker's Newark plant was converted to vehicle production in 1957, building the Plymouth Fury and several Dodge models. Later, it produced the Plymouth Volare and Dodge Aspen. Chrysler invested $100 million in the early 1980s to retool the plant and build the K-car compacts Dodge Aries and Plymouth Reliant and other vehicles before production shifted to the Durango in 1997.

In October 2003, then-Chrysler Group President and Chief Executive Officer Dieter Zetsche, who is now CEO of DaimlerChrysler, came to Newark for the production launch of an even bigger 2004 Durango. The next year, the one millionth Durango rolled of the line.

But as gasoline prices soared, demand for big vehicles tanked -- Durango sales dropped 39 percent in 2006 compared to the previous year. Chrysler, with fuel-thirsty trucks representing more than 70 percent of its sales, had little to offer consumers who now wanted smaller, more fuel-efficient models.

The automaker's truck inventories mushroomed, leading to a $1.5 billion loss in the third quarter last year -- Chrysler's first dip into red ink after 12 consecutive profitable quarters.

As Chrysler explored its options for restructuring, Newark was caught in the crosshairs. Sources familiar with the plan have said it includes developing a common SUV architecture for the Mercedes M-Class, Jeep Grand Cherokee and Dodge Durango. Durango production is expected to move to Chrysler's Grand Cherokee plant in Detroit.

Delaware officials and congressional members have met with Chrysler executives in a bid to keep the Newark factory open.

It's been a baptism by fire for Richard "Mack" McDonaugh Jr., who has worked at the Delaware plant since 1976, when the company had 5,600 workers.

He only took over as UAW Local 1183 president on Feb. 5 and has been fending off TV crews and reporters for weeks. McDonaugh sent an e-mail to workers Monday telling them not to believe rumors, but declined to comment in advance of today's announcement.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.