July 13 (Bloomberg) -- Chrysler Group LLC’s factory in Belvidere, Illinois, is bustling, shipping about 300 Dodge Darts a day. A mile east on U.S. Route 20, a new restaurant has added an assembly line of its own: one that makes steak sandwiches.
Business is looking up at Fiesta Market, a grocery that had struggled during the recession, said owner Mike Bolis. In May, he added an adjoining restaurant, Fiesta Tortillas, and he has hired 15 more people to make and sell fast-food items such as Mike’s Famous Steak Sandwich, a seven-ounce rib-eye served on a bun with lettuce, tomatoes and grilled onions.
“Hopefully, the people from Chrysler will come visit us more often,” Bolis said in a telephone interview. “I do see more people from the plant coming in. I do have my regulars.” The restaurant also makes daily deliveries to the factory.
Chrysler, under the control of Italy’s Fiat SpA, has surged back to health since its 2009 bankruptcy and government bailout, and it’s bringing Belvidere along for the ride. The factory completes hiring for a third crew this month, which will bring it to 4,500 workers cranking out vehicles 120 hours a week. It employed as few as 200 people three years ago.
Chrysler’s investment will bring total employment by the automaker and its suppliers in the region to 6,000, according to the area’s economic development group.
President Barack Obama touts his administration’s rescue of the industry and factory towns such as Belvidere as a crowning achievement of his first term. He has used it to differentiate himself from Republican candidate Mitt Romney, who opposed government financing of the restructuring and criticized it as “crony capitalism” to help union allies.
“As much as people may have disdain for some of these bailouts in theory, the reality was the situation required extraordinary measures,” said Diane Swonk, chief economist of Mesirow Financial Inc. in Chicago, about 70 miles southeast of Belvidere. “It was the lesser of two evils, and it is now giving us some support for an economy that is still very damaged,” she said in a phone interview.
Belvidere and other communities tied to the auto industry are bucking a national trend of slowing job growth. Employment in the motor vehicles and parts manufacturing sector has increased by 25 percent, or 155,400 jobs, from the industry’s lowest point in July 2009, when General Motors Co. emerged from bankruptcy protection, according to the Bureau of Labor Statistics.
Shortened summer shutdowns at auto plants helped reduce the number of applications for jobless benefits in the week ended July 7, the U.S. Labor Department said yesterday.
The national jobless rate has exceeded 8 percent since February 2009, the longest stretch since monthly records began in 1948. Private payrolls, which exclude government agencies, increased by 84,000 workers in June, the weakest growth in 10 months, Labor Department figures showed on July 6 in Washington.
Weakness in the broader U.S. labor market is depriving Obama of progress on voters’ biggest concern four months before the election. Obama, speaking July 6 at a campaign stop after employers added fewer jobs than economists estimated, called the hiring “a step in the right direction” and said the economy has to grow “even faster.” Romney called the report “another kick in the gut.”
It’s a different story in Illinois, where the unemployment rate declined for a ninth consecutive month in May, to 8.6 percent, according to the Bureau of Labor Statistics. The state’s jobless rate had reached 11.4 percent in January 2010, the highest since July 1983.
The state ranks third in the Bloomberg Economic Evaluation of States from the first quarter of 2010, when auto sales began recovering from the deepest slump since 1982, through the first quarter of this year, the most recent data available. Michigan, home to Chrysler, GM and Ford Motor Co., and energy-rich North Dakota were the only states to outperform Illinois in that span.
The Belvidere Church of Christ, a couple of miles east of Chrysler’s factory, is rebuilding its congregation after dwindling by more than a third in part because of layoffs in the mid-2000s at the carmaker’s plant, said Daniel Potter, an elder at the church.
“When the Chrysler plant slows down, Belvidere slows down,” said Potter, 58, who also works at a nearby repair shop for heavy-duty vehicles that has seen a rise in business from the return of semi-truck traffic. “Hopefully, this Dodge Dart will be a success and just keep going.”
The truth is that Belvidere dodged a bullet, said Frederic Brereton, the city’s mayor for the past 15 years.
The factory, which also assembles Jeep Compass and Patriot sport-utility vehicles, wasn’t named in the five-year plan Chrysler presented to analysts and reporters in November 2009, and the Dodge Caliber car that was built in Belvidere at the time was marked as a model that would be discontinued.
Instead, the plant resumed two-shift production. Then, three days before Chrysler aired a two-minute Super Bowl commercial with actor and director Clint Eastwood heralding Detroit’s revival, Chief Executive Officer Sergio Marchionne joined Illinois Governor Pat Quinn at the Belvidere plant to announce a $700 million investment and the addition of a third crew.
“It was as if our city had won the Super Bowl,” Brereton said in a telephone interview. “We’re just beginning to feel the impact of the employment. The real estate market is beginning to benefit from increased rentals from employees that may be moving to the region.”
Hiring is spreading beyond the assembly plant. France’s Faurecia, Germany’s Eberspacher GmbH & Co. and Wilbur Ross’s International Automotive Components Group are among the suppliers that will add 550 jobs in the area, said Mark Williams, executive director of Growth Dimensions, an economic development group for Belvidere and Boone County.
“Go and look at the parking lots of our industrial buildings, and we’re full,” Williams said in a telephone interview. “The optimism is there. We feel the best is yet to come.”
The Chrysler factory in Belvidere is scheduled to start operating with three crews of workers on July 23, said George Welitschinsky, president of United Auto Workers Local 1268, which represents hourly employees of the plant. The factory will eventually assemble 1,300 vehicles a day, he said.
“We’re going to be pumping out some vehicles here,” he said in a telephone interview.
Dealers last month began U.S. sales of the Dart compact, Chrysler’s first car based on Fiat underpinnings. The Turin, Italy-based carmaker took control of Chrysler by pledging its small-car expertise to the combination, seeking scale that would spread fixed costs such as engineering and design.
Fiat shares have increased 11 percent this year to 3.94 euros.
Belvidere has seen its share of failed combinations and lackluster vehicles.
It started making Dodge Neon compact cars in 1994 and sought a partnership to make the car with Japan’s Mitsubishi Motors Corp. that didn’t come to fruition.
The Neon was replaced in late 2005 with the Dodge Caliber. The Caliber was available with a transmission created by Nissan Motor Co., a diesel engine supplied by Volkswagen AG and an all-wheel drive system developed with Mitsubishi. It was among the poor-selling cars that stifled owner Cerberus Capital Management LP’s efforts to turn around the company after it took over Chrysler in 2007.
Those cars simply weren’t competitive, said Chuck Eddy, vice president and principal of a Chrysler dealership in Austintown, Ohio.
“This car is doing what we tried to do with Daimler and weren’t able,” Eddy said in a telephone interview last month while driving a Dart to his store from an event for dealers in Auburn Hills. “There is a real energy between Chrysler and Fiat right now, and this car is proof.”
Chrysler is boosting production this year in North America at the fastest rate among U.S. automakers. The company built 1.23 million cars and trucks in the year’s first half, up 23 percent from a year earlier.
Carmakers are increasing production with U.S. light-vehicle sales on pace to rise by at least 10 percent for three straight years for the first time since 1973.
U.S. light-vehicle sales increased 11 percent in 2010 and 10 percent last year after falling to a 27-year low of 10.4 million in 2009, according to researcher Autodata Corp. Deliveries climbed 15 percent to 7.27 million this year through June, said Autodata, which is based in Woodcliff Lake, New Jersey.
Bolis, the Fiesta Market owner, said many of his customers moved out of the area after they lost their jobs during the economic downturn. Now, workers who relocated from a shuttered plant in Fenton, Missouri, a suburb of St. Louis, are frequenting his store between shifts on the line and weekend drives home.
“The more traffic you have, the better,” he said. “They’re working more hours, so they’re excited about that.”
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