WisBusiness: Doyle hopes Chrysler sale won’t affect Kenosha plant

By Brian E. Clark


MADISON – Gov. Jim Doyle said today that he hopes the pending $7.4 billion sale of the money-hemorrhaging Chrysler Group to a private equity firm will not affect the Chrysler engine plant in Kenosha and its 850 workers. The company lost $1.5 billion last year.

“We want those jobs to be safe,” said Doyle shortly after a press conference announcing $1 million in state loans and grants for the Stemina stem cell company.

Doyle said the state has been “working hard on an expansion of the Kenosha plant. We hope that is still part of Chrysler’s plans.”

Kenosha Mayor John Antaramian and Dan Kirk, head of United Auto Workers Local 72, said they both are waiting for additional word from Chrysler on the sale.

“No one knows right now what they will do,” said Antaramian. “But this is one of the best and most efficient engine plants they have.”

Added Kirk, “We hope they will keep it open, of course. But I was kind of ambushed by this news. I knew they wanted to sell it, but this was a surprise.”

Last summer, Doyle went to Detroit to met with Chrysler Group President Tom LaSorda to tell him the state was willing to contribute to the company’s investment in Kenosha. Not long after than, the Automotive News reported that DaimlerChrysler AG was preparing to invest $500 million into its Kenosha factory as part of plans to pump $2 billion into three plants that will make a new V-6 engine.

In February, however, Kenosha Chrysler announced plans to change its business model, cut costs, close plants and eliminate 13,000 jobs. Kenosha was not included in the list of plants to be closed.

At the same time, the company said it would invest $3 billion in its power train program. A Chrysler spokesman said the investment would include new and expanded facilities to build engines, transmissions and axles. Calls to Chrysler were not returned.

Anataramian said the expansion of the Kenosha plant has been “put on hold.”

He said the city, county and state had all talked with Chrysler about what they could do to help, but that nothing had been finalized.

DaimlerChrysler AG announced Monday morning that it would sell 80.1 percent of its Chrysler to Cerberus Capital Management LP, ending the troubled, nine-year-old partnership. Daimler-Benz AG paid $36 billion for Chrysler in 1998. The sale is expected to be completed by the end of the third quarter.

The German-American automaker said an affiliate of Cerberus will hold the majority of a new Chrysler Holding LLC, while DaimlerChrysler will keep a 19.9 percent stake. Chrysler will keep its heavy obligations for pensions and health care costs — a key issue complicating DaimlerChrysler’s effort to sell the division.

The prospect of a sale to a private equity firm had worried unions in the United States because of the firms’ tendency to slash costs and jobs. But United Auto Workers President Ron Gettelfinger called it the best choice.