Bankruptcy Hits Home in Auto Heartland
With Four Chrysler Plants, Manufacturing Hub Feels Sting of Latest Blow to Industry

By Dana Hedgpeth
Washington Post Staff Writer
Friday, May 1, 2009

KOKOMO, Ind., April 30 -- The big-screen TV over the bar at Buffalo Wild Wings was tuned Thursday to ESPN when four Chrysler employees took seats at a nearby table.

Rick Ward, a 21-year Chrysler employee here who sports a long braid, a beard and half a dozen tattoos, politely asked the crowd whether they would mind switching channels to hear the president's speech.

No one complained. After all, roughly half of Kokomo's economy depends on the four Chrysler plants that make transmissions for trucks, sedans and Jeeps, and the molds to hold them. There's also a Delphi parts plant in this city of 46,000 that has had a hard time, as it struggles through a bankruptcy.

There was little conversation as President Obama took to the air to vow that the government would turn Chrysler around. He blamed a small group of hedge funds for the fact that the company would have to spend time in bankruptcy.

After the speech, Ward and the others rehashed what they had heard, some glancing at notes they had taken.

"He could have forced the banks to accept a better deal, rather than forcing us to go into bankruptcy," said Steve Brooks, a 39-year-old former Marine who has worked for Chrysler for 13 years.

Ward, 52, fired back: "I don't think he's forcing us." Another 21-year Chrysler employee, John Thompson, 44, chimed in, "He wants to make hedge funds accountable. It's time he put a check on them."

"Some people thought he was turning his back on us," Ward said. "But he made it clear today, 'I don't stand with hedge funds.' "

For all of the support of the president, though, it didn't take long for the reality of the new phase to settle in. The workers started to receive text messages with news that factories may be closed for 30 to 60 days, as the restructuring details are worked out.

Chrysler said it sent workers home from at least two factories in the Detroit suburb of Warren, Mich., because parts suppliers have stopped shipping after the bankruptcy filing. Vice chairman and president Tom LaSorda said in a conference call Thursday that the company had no choice but to close the plants, which make parts for or assemble the Dodge Ram pickup truck.

Kokomo has already been hit hard by the industry's struggles.

Delphi's workforce has shrunk from roughly 14,000 workers to 3,200. And the number of employees at the Chrysler plants have dropped from about 7,000 to 3,000, according to union officials. The unemployment rate is hovering around 14 percent. Foreclosures are up. More small businesses are closing, restaurants are less busy and furniture sales are sluggish.

"The entire country is facing tough times," Kokomo Mayor Greg Goodnight said. "Here, it's been a little tougher."

Goodnight said he is optimistic that the bankruptcy will be temporary and not be a setback to Chrysler or the city. Earlier this month, he wrote a letter to Fiat's chief executive, encouraging him to set up offices in Kokomo. He got a response, from Ferruccio Luppi, Fiat's executive vice president for business development, inviting him to visit company headquarters in Turin, Italy. Goodnight has also reached out in the past few weeks and talked to Ed Montgomery, Obama's point man to help auto communities recover, asking him to come and visit Kokomo.

"If there's a city that's been affected by this auto downturn, it is Kokomo," Goodnight said. "We want him to know that. We've got to be on their radar. We aren't looking for a handout. Right now we're good on cash. But Chrysler is our largest single property tax provider for the city, the county, and the schools and other services."

The mayor said he is trying to expand the city's economy beyond the car industry. He hopes Montgomery might be able to help the community attract the kind of ventures Obama often talks about being a new source of jobs: sustainable energy efforts involving windmills, batteries and solar panels.

At Buffalo Wild Wings, a few said they worried that the company's bankruptcy could hurt car sales.

"Sure, a consumer's going to be concerned," Ward said. "They'll ask, are we going to build quality cars? We'll build them and we'll build them better than the Japanese."

Brooks chimed in, "There's no reason people should be scared to buy our product, they have the best guarantee -- the federal government."

A few miles from the bar, next to a Chrysler plant, salespeople at the Button Chrysler Dodge dealership said they didn't think the bankruptcy would hurt sales. In April, sales were up -- but it was in large part because Chrysler workers who took a recent buyout were given vouchers to use toward buying a new car.

"The public has been preparing for this," said Marge Weigt, general sales manager at Button. "It's not a surprise. It doesn't mean we shut our doors. People will need cars. Their cars will break down, they'll have accidents, they'll need servicing. The government is just trying to help us through. If they didn't, I'd be pretty sad."

Back at the bar, the conversation went to how Fiat may run things. Thompson said he believed the company would build more fuel-efficient cars sooner. "We were selling trucks left and right, but then when the gas crunch came we weren't prepared. The market turned on us."

Brooks was optimistic that a merger with Fiat would work out, given Obama's backing of the deal. "With our president looking out for us we're going to be put on a more level playing field," he said.

Staff writer Kendra Marr contributed to this report.

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