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CHRYSLER'S
$1 BILLION INVESTMENT
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By Brian R. Hook
Chrysler Group’s planned investment of some $1 billion to improve its St. Louis automotive-manufacturing facilities is expected to have a major ripple effect throughout the regional economy. The investment insures competitiveness and plant productivity that could generate an estimated economic impact of $7.4 billion.
Chrysler, part of the global automotive-manufacturer DaimlerChrysler AG, plans to modernize and totally re-tool its St. Louis North and St. Louis South assembly plants in Fenton. Frank Ewasyshyn, executive vice president of manufacturing at Chrysler Group, says the investment will improve manufacturing quality, flexibility and productivity.
“These changes are necessary to ready the plants for future models,” Ewasyshyn says. Improvements at the plants are already underway and will continue for the next few years. “We will also take the opportunity to add more manufacturing flexibility to the plants, especially at the south plant where they will get a whole new body shop,” he says.
The massive new capital investment by Chrysler will provide St. Louis South with the capability to manufacture multiple types of vehicles on one line. The plant will be the third Chrysler Group assembly plant to implement a fully robotic body shop, which gives it the ability to automatically adjust to build multiple models. The investment at both plants, according to Chrysler, will help the company to reduce new-model changeover downtime.
Chrysler says the investment will also help to implement what it calls “smart manufacturing” processes, which it claims, fosters creativity and innovation on the plant floor. Smart processes include work teams, self-designed workstations, a framework for flexible job classifications and extensive employee training. These factors are designed to create a better work environment and give increased support to assembly line operators.
The manufacturing plants are currently home to the Dodge Ram Standard and Quad Cab Pickup and the Chrysler Town & Country, Dodge Caravan and Dodge Grand Caravan minivans. Chrysler says the investment will be shared between the two plants.
 Frank Ewasyshyn, executive vice president
of manufacturing at Chrysler Group, says the
investment will improve manufacturing quality,
flexibility and productivity. |
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The Chrysler Group St. Louis South Assembly Plant, which was constructed in 1959 and employs 3,200 people, achieved double-digit productivity gains and was listed as the most productive minivan plant in 2005 by The Harbour Report North America.
In 2003, The Harbour Report recognized the St. Louis North Assembly Plant, built in 1966 and employing 2,300 people, as the most-improved plant within the Chrysler Group. It increased its efficiency by 28.6 percent during the launch of the Dodge Ram, a period in which manufacturing efficiencies are often difficult to achieve.
What does it take for a region to land an investment of this size? “An investment of this nature calls for cooperation from the company, labor union and government. In this case, the company saw good cooperation from all parties.” Ewasyshyn says.
Fenton Mayor Dennis Hancock, who worked with Chrysler on the project, says the $1 billion investment means several things to the region. “First, it means that we will be keeping thousands of people directly employed today and still working for the foreseeable future. It’s a long-term commitment by Chrysler to the two plants in Fenton,” he says.
“But beyond that, it also means continued funding for all of the taxing jurisdiction that benefit from Chrysler being in the region. When you look at the importance to the region, it goes well beyond Fenton. The ripple for this is huge for the region. There are people that work at Chrysler who live throughout the whole St. Louis region.”
Hancock says that his city has been working to implement a manufacturing-friendly environment for the past five years. “We focused on our manufacturing and industrial base in the city… trying to accommodate job retention and job attraction. When you look at the economic viability of the city, you’ve got to have jobs,” he says.
The economic impact from the investment extends well beyond Fenton. Bryan Bezold, RCGA chief economist, estimates the jobs at the two plants generate a regional direct economic impact of $4.9 billion a year. These jobs support another 20,000 related jobs throughout the region, generating an additional $2.5 billion in indirect economic benefits. Therefore, the combined automotive jobs have a direct and indirect economic impact of $7.4 billion a year. Manufacturing in general, throughout the region, employs 146,500 people, as of October 2005, up 0.8 percent from the October 2004.
Greg Steinhoff, director at the Missouri Department of Economic Development, says the state is pleased that Chrysler is investing such a large amount in the St. Louis region. “We realize that this has been a very difficult time for the U.S. car manufacturers,” Steinhoff says. “So, we really believe that this is a significant commitment, not only to the St. Louis region, but to the state as a whole.”
“We believe that Chrysler is impressed by our commitment to developing a more pro-business climate in Missouri. We definitely think that helped in their decision making process,” Steinhoff says. He cites workers-compensation reform, tort reform and re-vamped economic incentives.
Steinhoff says there were both local incentives and state incentives offered to Chrysler. The State will provide $16 million in bonds through a program that provides tax credits to a business related to a portion of the project costs. Another portion of the incentive package is part of the state’s retained-jobs training program. All together, the state is offering $32 million in incentives that will incur in several increments.
“It is a very reasonable investment on the state’s behalf to draw such a huge investment from the company and ensure that those two facilities in Fenton are kept up to date and that we can retain the manufacturing jobs in the St. Louis area,” Steinhoff says.
St. Louis County Executive Charlie Dooley says economic strength is linked to the region’s manufacturing base. “We’re determined that this critical element will remain and grow in our community,” he says. “We cannot afford any other outcome.”
The automotive industry in Missouri employs approximately 36,500 people, making up nearly 12 percent of the state’s total manufacturing employment. The average wage for an autoworker in Missouri is $53,117, well above the state average of $34,855. Missouri has the sixth highest level of auto industry related employment in the U.S. and motor-vehicle manufacturing accounts for 1.8 percent of Missouri’s gross state product |
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