In 1902, Thomas B. Jeffery and His son switched from making bicycles to building cars in Kenosha, WI, propelling the then-small town of 22,000 located between Milwaukee and Chicago, into the automotive age.
Over the next 105 years, Kenosha has grown to a population of nearly 100,000 and has clung to its automotive heritage, despite some turbulent times featuring storied names such as Chrysler, Dodge, Nash, American Motors Corp. and France's Renault SA - all of which have built cars there.
Automobile production ceased in 1987 when the former Chrysler Corp. purchased AMC, but engine output has continued uninterrupted, making Kenosha reputedly the home of the oldest continuously operated automotive plant in the world.
Now Chrysler LLC is investing $450 million to retool the Kenosha engine plant for a new V-6 scheduled to begin production in 2011.
The Jefferys were modestly successful auto makers, but when the father died in 1916 their company was sold to Charles W. Nash, former president of Buick and later General Motors Corp.
Nash renamed the auto maker after himself, and the Nash automobile went on to become popular and profitable, chalking up a reputation for numerous innovative firsts. In 1937, Nash Motors merged with Kelvinator, a major appliance manufacturer, to become Nash-Kelvinator Corp.
During World War II, the company built Pratt & Whitney aircraft engines, but by 1948 Detroit's Big Three were squeezing independent auto makers such as Hudson Motor Car Co., Studebaker Corp., Packard Motor Car Co. and Nash. Charles Nash tried to form an alliance with the others, but he died later that year and the deal fell apart.
In 1954, Nash-Kelvinator merged with Hudson to form AMC. The Nash and Hudson nameplates survived until 1957, when they were replaced by Rambler, the name Jeffery had given his original model 55 years earlier.
George Romney, father of former Massachusetts governor and Republican presidential candidate Mitt Romney, served as AMC's president from 1954 until he resigned in 1962 to run successfully for governor of Michigan.
Romney's strategy focused on developing high-mileage compact cars to battle what he called the Big Three's “gas-guzzling dinosaurs.” And for a time it worked well.
But by 1960, the “dinosaurs” had their own compacts. And, as the industry's smallest auto maker, AMC came perilously close to financial disaster several times during the following 20 years.
However, it did manage to buy Jeep from Kaiser Jeep Corp. in 1970, a major stroke that remains a key Chrysler asset today.
In 1979, Renault, which never had created more than a blip in the U.S. market, came to the rescue with $135 million to gain a 5% stake in AMC. Renault raised its stake to 49% in 1983, the same year the auto maker began making the Renault Alliance and Encore compacts in Kenosha, alongside AMC's nameplates.
The French auto maker also had big plans to build a fullsize sedan called the Premier and built an assembly plant in Bramalea, ON, Canada, for that purpose.
Renault had early success in the U.S. but was amenable to overtures by Chairman Lee Iacocca to take over its North American operations, and the old Kenosha works finally settled in Chrysler's hands.
The original Jeffery factory was razed about 20 years ago, but the contiguous Chrysler engine plant in midtown Kenosha still makes 2.7L and 3.5-L V-6s and will start retooling to build a new, more fuel efficient V-6 code-named “Phoenix” in 2010, a year before production begins.
The Kenosha upgrade is part of a $3 billion project initiated by the former DaimlerChrysler AG last year before it sold 80.1% controlling interest in the Chrysler Group to Cerberus Capital Management LP. Cerberus hasn't altered the plan, Chrysler confirms.
Besides Kenosha, the project includes upgrading engine plants in Trenton, MI, and Saltillo, Mexico, work that's already under way with production scheduled to start in 2009; shifting axle production from Detroit to a new facility under construction in Marysville, MI; and a new joint venture in Kokomo County, IN, with Germany-based Getrag AG to produce a dual-clutch 6-speed automatic transmission.
The combined initiative, which is based on lean-production principles, aims for greater overall drivetrain efficiency and is expected to deliver major gains in fuel economy. Chrysler won't say how much, however.
The three plants are targeted to build 1.28 million new engines annually, replacing four existing V-6s with a single new design. Kenosha's share is set at 400,000 units, but it will utilize only 470,000 sq.-ft. (43,664 sq.-m) of the 1.9-million sq.-ft. (176,500 sq-m) complex Chrysler inherited with the AMC acquisition.
Fred Antenucci, director-engines/foundry, declines to reveal details of the Phoenix-engine specifications.
The new mill will be used in cars, trucks and SUVs “and offer us greater flexibility to make changes,” he says. “We will be able to ship based on (market) demand and balance the work without having to resort to overtime or idling” (an engine line), as is now the case with four distinct 6-cyl. configurations.
During its halcyon days in the 1960s, the AMC Kenosha complex employed up to 15,000. By the time Chrysler took over, the payroll had shrunk to 8,000 and it soon laid-off 5,300 workers as car assembly was discontinued.
Still, Kenosha hung in there, supplying AMC's 4.0L inline 6-cyl. engines for Jeep nameplates until 2005. By late 2007, only the V-6s being phased out remained in production and employment narrowed to 930, including 709 hourly workers.
After the Kenosha plant is retooled two years from now, Chrysler will retain 625 employees, with co-located suppliers adding another 200 workers, Antenucci says.
In an area where unemployment hovers between 5.5% and 6%, saving good jobs at a key contributor to the local economy was enough for Chrysler to elicit a $16.8 million incentive package from the state and local governments and local utilities to keep the Kenosha plant humming.
Some $10 million of that is in “forgivable loans,” which may not have to be repaid based on Chrysler meeting certain future obligations.
Howard Brown, publisher of the Kenosha News since 1962 and who has witnessed first-hand the community's automotive ups and downs, says the engine-plant deal demonstrates “the union and management have cooperated very effectively. I think the future looks relatively promising.”
Chrysler's first brush with Kenosha came in 1981, when it approached AMC to assemble fullsize sedans (Chrysler LeBaron and Fifth Avenue and Dodge Diplomat) there. It was the brainchild of Steve Sharf, Chrysler's then executive vice president-manufacturing.
“These were rear-wheel-drive cars. and we had switched to all front-drive,” Sharf recalls. “We didn't have a plant for them, and American Motors was not busy enough and they could do it cheaper than we could.
“The LeBaron was an old design, but the police and people liked it; it was a good seller.”
Tooling was transferred from St. Louis to Kenosha, and some 250,000 Chrysler and Dodge models were built there over the next two and a half years, says Sharf. That relationship ultimately led to Chrysler's purchase of AMC for $1.1 billion, he says.
“We needed more capacity, and they had a new plant in Bramalea ON, Canada,” he says. “That and getting Jeep in the deal were the main reasons we wanted American Motors.”
Both Bramalea and Jeep have played prominent roles at Chrysler ever since. The auto maker's highly regarded Chrysler 300 and Dodge Charger sedans both are built in Bramalea.
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