DETROIT — There is a section of Detroit’s east side that sums up the city’s decline, a grim landscape of boarded-up stores, abandoned homes and empty lots that stretch all the way to the river.þþAnd in the middle of it stands one of the most modern and successful auto plants in the world.þþMore than 4,600 workers staff Chrysler’s sprawling Jefferson North factory nearly around the clock, making one of the most profitable vehicles on the market, the Jeep Grand Cherokee.þþThe plant, painted white and surrounded by a fence topped with barbed wire, generates about $2 billion in annual profits and is a huge contributor to the health of Chrysler, the nation’s third-largest automaker, and Fiat, its Italian parent company.þþFor a city on the brink of bankruptcy and an American auto industry that many had written off, Jefferson North’s revival has become a symbol that Detroit’s seemingly endless downward spiral can be reversed.þþ“Everything is aligned there,” said Kristin Dziczek, an analyst at the Center for Automotive Research in Ann Arbor, Mich. “You have a hot-selling, high-profit vehicle, a flexible labor agreement and a facility that the company has invested in instead of abandoned.”þþFew could have envisioned the turnaround when Chrysler tumbled into bankruptcy in 2009.þþThe plant was aging, sales volumes were plummeting and its future was in question. But a government bailout, along with two-tiered pay structure that cut wages for new employees by $12 an hour, saved the company and delivered it into the hands of Fiat, which now is its majority owner.þþSince then, annual production has skyrocketed from fewer than 100,000 vehicles a year to more than 300,000. And a work force that had dwindled to 1,300 people has more than tripled. In June, Grand Cherokee sales rose 33 percent in the United States, as consumers paid as much as $50,000 for a fully loaded model.þþThe profits and productivity at Jefferson North would put it on par with the most efficient luxury car plants in Germany and the best factories operated by Japanese automakers in the southern United States.þþThat Jefferson North is situated in one of the most impoverished parts of Detroit only made it more of a gamble for Chrysler to keep.þþ“There were certainly skeptics about us continuing to do business in the city,” said Scott R. Garberding, Chrysler’s chief of manufacturing.þþComing out of bankruptcy, the company had little cash, and less margin for error, in deciding which models to push to help it survive. “For a time, everything was on the bubble,” Mr. Garberding said.þþBut at Jefferson North, the company already had a new Grand Cherokee close to production, part of a $1.8 billion investment in the plant it announced in 2008. The plant also had a skilled veteran work force that would not need much training. In addition, the plant had received a city tax abatement on new machinery and equipment.þþIn the end, Chrysler decided that the stylish Jeep was its best bet for a hit.þþToday, Jefferson North stands as the last auto assembly plant entirely within the city limits of Detroit, which once had nearly a dozen of them. General Motors also operates a car plant that is partly in Detroit and partly in the neighboring city of HamtramckþþThe Chrysler plant is one of the biggest employers in Detroit, which has a 16 percent unemployment rate. It is also one of its largest taxpayers, last year paying more than $12 million in property taxes. A third of its workers, both union and management, live in the city, the company said.þþSince its bankruptcy, Chrysler has hired two full shifts of new workers, about 2,200 people, at the lower wage. Additional workers have come from the ranks of veteran employees who had been laid off.þþThe company has taken advantage of the groundbreaking labor agreement with the United Automobile Workers union, agreed to in 2007, to bring on new employees at an entry-level wage just under $16 an hour, compared with the $28 earned by longtime union workers.þþThe infusion of lower-paid workers has bolstered the plant’s profitability and competitiveness and provided desperately needed jobs for the community.þþKawanne Clark, a 23-year-old native of Detroit’s east side, was hired a year ago to work on the assembly line. He had waited more than two years — working at a furniture store and attending college part time — since first applying for the job.þþ“I took the chance because it’s a great opportunity with great earning potential,” Mr. Clark said. “You can move up, especially if you’re a young guy who is driven and motivated.”þþHe was recently promoted to team leader on the final stages of the assembly line, which is turning out more than 1,200 new sport utility vehicles a day. About 80 percent of production is the Grand Cherokee, and the rest is the Dodge Durango, another sport utility vehicle. It’s a testament to the Grand Cherokee’s immense popularity that it is exported from the plant to 127 countries in every region of the world.þþ“Every vehicle we manufacture is already a sold order,” Jason Ryska, the plant’s manager, said. “We’re not even building inventory.”þþThe plant’s productivity is essential to Chrysler, which is basically supporting Fiat as the two companies complete their merger. When it slowed production in the first quarter of this year to switch to an updated version of the Grand Cherokee, profit at Chrysler plunged 65 percent.þþSergio Marchionne, chief executive of both Chrysler and Fiat, acknowledged the contribution Jefferson North made compared with plants building its other products. “I’d have to make an awful lot of Dodge Darts to replace the profits made by the Grand Cherokee,” he told analysts in April.þþAmong the changes that Mr. Marchionne introduced when he took over Chrysler was Fiat’s exacting manufacturing style, which had a big effect in a plant that had struggled under Chrysler’s previous owners. One of his first moves was to order a top-to-bottom cleaning and repainting; in an unusual move, it was all done by the plant’s workers, not just maintenance crews.þþ“Coming out of bankruptcy, nobody knew what to expect,” said Jeffrey Brunson, a union official at the plant. “It’s been amazing how great this has been for the company and the employees and Detroit.”þþThe success of Jefferson North defies conventional wisdom in the auto industry that the most efficient plants are new factories built on big tracts of rural land in southern states like Tennessee and Alabama. In fact, the wide, sparsely used streets around Jefferson North make it easy for trucks laden with supplies or finished Jeeps to move in and out. “Our urban core is much less dense than in other cities,” Ms. Dziczek said. “And that’s a huge statement about Detroit.”þþIt’s hard to escape the stark contrast between the manicured lawns and jammed parking lots on the grounds of the plant and the desolate, pockmarked neighborhoods that surround it.þþStreetlights are often dark at night on Jefferson Avenue because of a lack of money in the city’s budget. In May, the police discovered a human torso in a burned-out home three blocks from the plant’s front entrance.þþThe biggest building nearby is the long-closed, graffiti-covered Continental Tire factory, empty for decades but never torn down.þþFor new hires like Mr. Clark, working at the Chrysler plant is a rare chance to be part of what’s left of the city’s signature industry. His grandmother retired from General Motors, and his father works at the Ford Motor Company. He grew up just a few miles away, but punching in at Jefferson North is like entering a different world.þþ“I grew up on the east side, and it’s not too good around here,” he said. “Coming here is one of the best decisions I ever made in my life.”þþ
Source: NY Times
