chapter 7: recall

Insourcing Workers From Detroit

Photographer: Christopher Morris/VII for Bloomberg.com
The Chrysler North Jefferson facility in Detroit.

As Chrysler was tumbling toward bankruptcy, Scott Garberding was trying to keep the Grand Cherokee alive. Chrysler had committed $1.8 billion to redesigning the SUV and overhauling Jefferson North with a high-tech body shop that would build it with better quality. All of that hung in the balance as Chrysler was running out of cash. Garberding, then head of Chrysler's purchasing operations, had to make some tough choices as he drew from the automaker's receding resources.

Lawn maintenance didn't make the cut.

"We didn't really have a way to spend money on that," said Garberding, 49, youthful and brown-eyed, who now runs Fiat's (F) purchasing.

No Longer Motor City

When the bailout billions came through from the government in June 2009, Garberding had to spend it on contractors who provided car parts and manufacturing equipment needed to build the Jeep. He had nothing left for aesthetics like landscaping. "I had to put resources to work on our production suppliers to get those contracts ready because we absolutely couldn't start the plant without them," he said.

Chrysler also couldn't have restarted Jefferson North without reaching a groundbreaking deal with the United Auto Workers two years earlier. The union agreed to allow new hires at the Detroit Three automakers to be paid $14 an hour, half the $28 an hour veteran workers made. That cut Chrysler's labor costs by more than a third, from almost $76 an hour in combined wages and benefits in 2007 to $49 in 2011.

Photograph by Christopher Morris/VII for Bloomberg.com Close

Photograph by Christopher Morris/VII for Bloomberg.com

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Photograph by Christopher Morris/VII for Bloomberg.com

Reckoning to Revival: Rebuilding the U.S. Auto Industry
Ch. 1
Buckle Up: The Potholes Stay Where They Are
Ch. 2
Off-Road: The SUV's Ride From Peak to Valley
Ch. 3 Recalculating: Failed Talks and an Italian Wedding
Ch. 4 Rearview: Obstacles Closer Than They Appear
Ch. 5 Done Dealership: Collateral Damage to a War Hero
Ch. 6 Idling: Father and Son Live Through Layoffs
Ch. 7 Recall: Insourcing Workers From Detroit
Ch. 8 Trim: Moving the Assembly Line Outside
Ch. 9 High Gear: A New Jeep Every Minute
Ch. 10 Differential: The Divide Over Wages
Ch. 11 Ignition: 'Isn't That What America Is All About?'
Post-Crash Site: Five Scenes of a New Life

Workers also accepted a modification to how they're paid overtime -- instead of after eight hours in a day, overtime comes after 40 hours in week. Three crews of workers at Jefferson North put in 10-hour days, four days a week for straight pay. That allows the plant to run 20 hours a day, six days a week without overtime.

That's been "incredibly critical" to Jefferson North generating profits for Chrysler, Garberding said. It's the reason Chrysler has hired more than 3,100 workers at Jefferson North since 2009 -- a reversal from pre-bankruptcy days, when Chrysler was outsourcing work to lower-cost outside contractors.

Video: How Chrysler Saved the Last Auto Plant in Detroit

But appearances matter. And watching Jefferson North go to seed in June 2009 -- one month into bankruptcy -- was particularly painful for Garberding. He had managed the plant in 2000 and understood its significance not just as a moneymaker, but as a symbol of Chrysler's Detroit roots. The company takes pride that it's the last auto assembly factory entirely inside city limits. (GM (GM) has a plant straddling Detroit and neighboring Hamtramck and Chrysler has a small facility that craft-builds Viper sports cars in the city.) Chrysler's swaggering 2011 Super Bowl ad starring hometown hero Eminem ended with the boast: "Imported from Detroit."

"We feel like we're a big part of Detroit and Detroit is a big part of us," Garberding said.

The plant was starting to blend into the blighted neighborhood, pockmarked with abandoned storefronts and boarded-up houses. It looked like Chrysler had thrown in the towel on Jefferson North, which Garberding said the company briefly considered before determining it was too far down the road on the new Grand Cherokee to build it anywhere else.

Just as Garberding was feeling embarrassed about the mess he couldn't afford to clean up, word made it to his office in Auburn Hills that something was going on outside Jefferson North.

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