Closing the Door on Old Chrysler

Detroit Suburb Braces for Its Loss as Automaker Steers Down New Road With Fiat

STERLING HEIGHTS, Mich., June 10 -- Chrysler completed its alliance with the Italian automaker Fiat Wednesday, largely wrapping up its short stay in bankruptcy and forming a new company that its backers hope to transform into a global automotive competitor.

But as people in this factory town and others around the country know, the birth of the new company also signifies the death of the old one: Eight major plants and 789 dealerships are slated for liquidation, consigned during negotiations to the pages of U.S. automotive history.

This middle-class suburb of Detroit recognizes both the pain and the possibilities of the arrangement shepherded by the Obama administration.

One major assembly plant is set to close next year. Another plant just down the road will be part of the new Chrysler.

"We're outraged that through the bankruptcy process that Chrysler would take billions in federal aid and then close plants in the U.S.," said William Parker, president of United Auto Workers Local 1700, which represents the workers at the Sterling Heights assembly plant that is scheduled to close next year.

On the other hand, he recognizes the company's new venture will preserve some jobs and give the company a chance to grow again.

"We appreciate that there's an alliance with Fiat, and we want them to succeed," Parker said.

The city and its merchants here fear that the loss of one plant will weaken an already slumping local economy. The plant being closed employs 1,500 and represents about 3 percent of the city's tax base. Unemployment runs as high as 15 percent in the area.

"No one is toasting the 'new Chrysler' around here," said Gary Wylie, a retired auto worker finishing up lunch at RJ's Bar and Grill just outside the plant's gates.

The Chrysler transaction came just hours after the Supreme Court cleared the way for the sale Tuesday night. The new company will be run by Fiat and will be jointly owned by the Italian automaker, the UAW's retiree health fund and the U.S. and Canadian governments. (The union health fund named former Michigan governor and U.S. representative James J. Blanchard to the new company's board.)

As part of the deal, the federal government wired $6.6 billion to the new company so it could restart production at plants that were idled during Chrysler's 42-day stay in bankruptcy protection.

Left behind are unwanted plants, and billions of dollars in debt and liabilities as well as $2 billion in federal funds to be distributed to the former company's creditors.