The sulfurous smell from the Kokomo Transmission Plant’s stacks was a sweet scent to Kokomo residents in early July 2009, a sign bankrupt automaker Chrysler Group LLC might actually survive.
For most of that spring, the automaker’s four Kokomo plants lay idle as the U.S. government negotiated a deal with Italian automaker Fiat SpA.
Union concessions, a reorganization critics claimed favored Fiat and the United Auto Workers over secured creditors, and the closure of many longstanding dealer operations followed.
It was painful. Now it all seems to be working out.
Chrysler Vice President Brian Harlow, the company’s head of powertrain manufacturing, said the recovery is under way.
“We’ve called everybody [at the Kokomo plants] back. There’s nobody on layoff, and people are working overtime. ... It’s as far as east is from west.”
As of August, in a state more dependent on manufacturing than any other, auto manufacturing was still the biggest source of manufacturing jobs, wages and revenue.
It could have been a very different outcome.
“Certainly the Midwest would have gone into a depression. [GM and Chrysler] would have taken suppliers down with them, including suppliers for the Japanese automakers. It would have severely restricted any production going on in this country,” said Kim Hill, director of the Automotive Communities Partnership at the Center for Automotive Research in Michigan.
Even in Kokomo, where 25 percent of the work force is tied to auto manufacturing, it’s not hard to find critics of the auto bailouts.
But 4,500 workers still have jobs at Chrysler.
In Fort Wayne, the General Motors truck assembly plant has added a third shift. In Marion, a retooling of GM’s Marion Metal Center operation is expected to bring in 366 jobs.
And in Hammond, Lear Corp., a supplier of seats for the Ford Explorer and other vehicles, is expected to add 285 new jobs as it expands operations.
The question of whether Americans would purchase vehicles from bankrupt auto manufacturers seems to have been answered in the affirmative, Hill said.
“That’s sort of been proven wrong, and the sales bear it out. It’s all about product,” Hill said. “Is it a good, high quality, durable thing that does what you need it to? If it is, people will buy it.”
Since the Indiana auto industry hit bottom in mid-2009, industry employment has stabilized for the first time in a decade.
Thanks to the addition of Honda in Greensburg, Toyota in Princeton and Lafayette, and Subaru in Lafayette, there’s even been significant growth in the number of auto assembly jobs in Indiana since 2000.
For GM and Chrysler, the recovery has come at a cost.
Beyond the cost of the bailouts, Indiana has also been the largest beneficiary, apart from Michigan, of the American Reinvestment and Recovery Act.
The federal stimulus bill will provide more than half — $692 million — of the $1.4 billion in Indiana auto sector investments announced since GM and Chrysler emerged from bankruptcy.
Those investments are expected to eventually create 4,986 auto jobs and retain another 1,517, according to data compiled by the Center for Automotive Research.
Those investments, however, won’t come close to bringing back all of the Hoosier auto jobs lost in the past decade.
Parts suppliers have been hit hardest.
Delphi Electronics & Safety, which had more than 5,000 hourly employees in Kokomo at the beginning of the decade, is now in the process of vacating more than 200,000 square feet of manufacturing space.
GM Component Holdings LLC now owns those buildings, and has made no promises regarding the fate of the few hundred remaining hourly workers. The contract keeping those workers employed ends in 2012.
Statewide, 43,000 were employed in parts manufacturing for the auto industry in August. A decade earlier, that number was almost 100,000.
Anderson, where GM/Delco once employed 18,000, now has no GM presence. The massive GM Indianapolis Stamping Plant, which once employed 6,000, is down to 600 hourly and slated for closure.
But even the parts supplier jobs seem to have stabilized.
Between parts suppliers and assembly plants about 500 jobs have been added since August 2009.
Ball State University professor of economics Michael Hicks said a full-blown recovery is beginning to appear.
“I liken it to a doctor reading a patient’s vital signs, his EKG and so on. You can see he’s getting better from the signs, even if he’s still unconscious and laying in bed.”
At Chrysler in Kokomo, workers are getting ready for a $300 million retooling of the Indiana Transmission Plant. The facility is expected to build a new 8-speed transmission, as part of the company’s plan to increase fuel efficiency by 25 percent. The company is running its Kokomo Casting Plant, which recently added an all-aluminum engine block to its product line, “every hour we can run it,” Harlow said.
At the mention of Hicks’ medical analogy, Harlow shrugged.
“It doesn’t feel like we’re still laying there in bed,” he offered.