Recalled: Insourcing workers from Detroit to bring a plant back to life
High gear -- a new Jeep every minute
Photo credit: BLOOMBERG
Editor's note: The U.S. auto industry has come full circle, from boom to bankruptcy to boom. Detroit's road from reckoning to revival was shorter than expected. This 4-part series examines how workers defied history and why Detroit's new strength is embodied in Chrysler's reborn Jefferson North assembly plant in Detroit.
"We didn't really have a way to spend money on that," said Garberding, 49, youthful and brown-eyed, who now runs Fiat's purchasing.
When the auto 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 UAW 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.
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.
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 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."
Scott Garberding addresses Jefferson North assembly plant employees during a celebration of the five millionth vehicle to roll off the line in August 2013.
"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.
Trim: Moving the assembly line outside
Like the captain of a sinking ship, Richard Owusu was still at the bridge a month after Chrysler declared bankruptcy and closed his factory, Jefferson North. As the plant manager looked out the expansive windows of his second-floor office in June 2009, he was disturbed.
The tree-lined promenade that led to the plant's gazebo-style entrance had become wild and overgrown.
Weeds and grass obscured the plant's tall, whitewashed walls.
Boarded-up, abandoned homes line the streets near Chrysler's Jefferson North plant in Detroit.
Photo credit: BLOOMBERG
Jefferson North -- once a source of strength and beacon of hope for Chrysler and Detroit -- looked abandoned.
Something had to be done. So on a Friday afternoon, the bald and compact plant manager called a meeting of the small crew that remained inside the shuttered factory -- about 50 people, mostly managers with a few hourly workers.
"We are family," Owusu told his staff in that hastily called meeting. "This is our home. It's not Chrysler's property, it is our property. So how do we, as a family, take care of our property?"
Owusu, 50, likes to say he grew up at Jefferson North.
Actually, he grew up in Ghana in West Africa. His family immigrated to New York in 1976, when Richard was 13, and began chasing the American dream. A good student, Owusu had many job offers as he completed his Ivy League education at Columbia University. He chose Chrysler because he saw the auto industry as quintessentially American. "It's such a big part of this country," he said.
Started at plant
He started at the bottom, as a salaried maintenance manager in Chrysler's brand new Jefferson North in 1991, before the first Grand Cherokee rolled off the line.
His humble beginnings and relentless work ethic endeared him to line workers, whom he came to know on a first-name basis. "Richard is cool," said Phyllis Adams, 42, who works in the paint shop. "He came a long way from maintenance manager."
After 13 years climbing the ladder at Jefferson North, Owusu left for a couple of years to take assignments elsewhere in Chrysler. When he returned as plant manager in 2006, it was a joyous homecoming.
"I was literally the son returning back home," he said. "The whole workforce really rallied around me."
But by June 2009, Owusu's home was derelict, much like the boarded-up houses that surround the plant on Detroit's impoverished east side. The plan -- the hope -- was that the 1,400 workers laid off on May 4 would return before the summer was out. He didn't want them to see their home looking like this.
Owusu: "This was a lot of work, and mind you, us management guys, we don't usually get our hands dirty."
Photo credit: BLOOMBERG
Mowing, sawing and grilling
There was no money in the budget for landscaping, Owusu explained; that had been made clear by Garberding, Chrysler's beleaguered purchasing chief. So if they wanted to put their house in order, it was up to them.
On Monday morning, the lawn patrol went into action on their 183-acre (74-hectare) home.
"Everybody brought in whatever they had," Owusu said. "Lawn mowers, weed whackers, a couple who were farmers brought in tractors, a couple of guys who loved trimming trees brought in chain saws."
What Owusu envisioned as a one-day job ended up taking an entire week.
"We cut the grass three times just to get it to look decent," Owusu said, laughing. "This was a lot of work, and mind you, us management guys, we don't usually get our hands dirty."
To cover all that ground, the crew organized into small teams and doled out assignments. Some trimmed trees, some trimmed bushes, while others hauled away the limbs and twigs.
Some cut grass, others raked, others bagged.
"We just put our assembly process to lawn cutting."
"The reality was, yes, we were a bankrupt company, but I wanted to create a perception that we were coming back," Owusu said.
A few of the workers brought barbecue grills from home and each hard day's work ended with a cookout in the parking lot.
Over hot dogs and burgers, Owusu could see the mood change among his new grounds crew.
"It helped us tremendously," he said. "It brought us together, working on a common goal other than building vehicles.
And the results were immediate. We could look out and say, 'Wow, we've transformed this place.'"
It also was the first sign that the bankruptcy had changed people, Garberding said. There was more focus on "we" and less on "me." More camaraderie, less conflict.
"It changed a lot of people's attitudes and I would say that's been at least as important as the things that a person can count," Garberding said.
Photo credit: CHRYSLER
Now start scrubbing
When the workers returned July 26, they walked through the gates of a plant that looked as if it had never closed. Owusu was there to greet them by name and shake their hands. "People were joyous," he said.
Soon after they arrived, Owusu called a town hall meeting of the entire workforce, blue collar and white collar. He explained that the new bosses from Fiat had their own manufacturing process and it required a blindingly clean plant.
"We cleaned the outside of the property, but the inside needs a lot of cleaning, too," he told them. "So as a workforce, that's what we have to do."
Owusu shut down production for three days and handed out mops, buckets and washrags. "A lot of soap, a lot of water, a lot of scrubbing," Owusu recalled.
As all of them, including Owusu, scrubbed the grime off the place, optimism grew. "We figured if we were cleaning up and getting the grass cut," said Adams, the paint-shop worker, "that must mean they're reopening the plant permanently. And boom, they did."
At the end of August, Owusu was called to headquarters as director of manufacturing engineering. Despite the promotion, he was devastated.
"I felt like this was my family and I don't want to leave them," he said.
He consoled himself with the satisfaction that he had restored confidence in a workforce that had felt defeated by Chrysler's capitulation to Chapter 11. "As the leader of the plant at that time, I had to show my people that there was no fear," said Owusu, who now oversees the paint shops in all of Chrysler's assembly plants. "I felt like we were definitely going to come back."
High gear: A new Jeep every minute
Jason Ryska, the current plant manager at Jefferson North, keeps a baseball bat in his office to remind him of the first time he made contact with the Jeep Grand Cherokee under Fiat management.
It was on stage in an amphitheater at Chrysler's design and engineering center in Auburn Hills, shortly after Fiat took control in 2009. Marchionne, the new chief executive officer, handed Louisville Sluggers to Ryska and a gang of Chrysler executives who had survived bankruptcy.
He told them to start swinging at the Jeep that was once the pride of the fleet.
This wasn't the hot new Grand Cherokee that Ryska builds now. It was the previous model that had been compromised and cost-cut until it was stripped of its dignity and reduced to an "also-ran," as designer Ralph Gilles said.
Ryska grabbed the bat and began pounding. It was a corporate catharsis.
"We beat the hell out of that thing," Ryska recalled. "It was symbolic of what we had to do as a company: Destroy everything that we built the company on, that we held in high regard and we thought made us successful. Destroy that in order to start from the ground level and build up."
Chrysler's Jefferson North assembly plant will produce more than 325,000 vehicles this year, the most since 1999 and five times more than it built in 2009.
Photo credit: BLOOMBERG
Pressure to produce
Ryska, a bespectacled and boyish son of Detroit, landed the plum job of managing Jefferson North about two years later, right after the Grand Cherokee had helped to drive Chrysler back into the black. Unlike Owusu, Ryska's role is not to manage crisis and collapse.
He's the man in charge of keeping Chrysler's most profitable product pumping out the doors of Jefferson North every day.
"With the responsibility of this plant comes a fair amount of pressure," said Ryska, 43, who grew up along the Detroit River beside steel mills and car factories. "But I still have my hair and it hasn't all turned gray yet."
Since Ryska arrived in January 2012, he has hired a third crew of workers, increasing employment at the plant to 4,500, from less than 1,400 when Chrysler emerged from bankruptcy. His factory runs 20 hours a day, turning out 1,205 SUVs a day.
To keep up with demand, he runs his factory on overtime three Sundays a month. This year, the plant will produce more than 325,000 vehicles, the most since 1999 and five times more than it built in 2009.
With estimated pretax profits averaging $10,000 on each Jeep Grand Cherokee that Chrysler sells, Ryska's plant generates more than $3 billion in annual operating profit.
Sweet spot of profitability
Jeeps have historically fetched high prices and generated exceptional profits because of the strength of a brand synonymous with four-wheel-drive capabilities -- and because SUVs in general are high-margin vehicles.
While Toyota may sell more Camry sedans, profit margins are slimmer, which means a standard car factory is not as profitable as an SUV plant.
High-end luxury sedans and sports cars such as a Lamborghini generate higher margins, yet they sell in such smaller numbers, so no single factory makes many. That leaves Jefferson North right in the sweet spot of high production and high profit.
Adding to profitability is its two-tier wage system, which significantly lowered labor costs, and the new Summit model, with a sticker price that can top $60,000.
With so much potential profit at stake, Ryska's burden is to crank out ever more Jeeps to kick Chrysler's comeback into high gear.
"We are pretty much at max capacity," he said. "It's quite a grueling schedule."
He'll take that over the situation he faced in 2009, when he managed a Chrysler metal stamping plant threatened with closure.
"It was the first time in my career that I got up in the morning and was concerned if I was going to have a job the next day," he said.
There was an exodus at Chrysler at that time, but Ryska refused to leave. "I come from a blue-collar family. My father retired from Ford, my grandfather retired from U.S. Steel," he said. "I always grew up that you had loyalty to a company."
Living through that taught Ryska something about himself: He thrives on being underestimated. "The best part is to take something where somebody says you can't do it. That's a hell of a challenge. I'll take that any day."
Nothing about Ryska's first 15 years at Chrysler prepared him for what he faces now: a growing company. "I spent the first half of my career very much in a cost-cutting company, always downsizing," he said. "Now it's, 'How do we keep up with demand?'"
Half the workers and managers at Jefferson North have fewer than three years of experience with Chrysler.
And building a Grand Cherokee is a highly complicated process. There are 52,789 different ways to configure all the options on a Grand Cherokee, plus there are 11 colors from which to choose.
It takes one and a half days for a Grand Cherokee to snake through the plant's 26.2 miles (42.2 kilometers) of assembly lines, which Ryska, a runner, likes to point out is the length of a marathon.
Another headache is keeping parts, such as engines and dashboards, flowing into the factory from the 785 trucks that arrive at its loading docks each day. Ryska is spending time at his suppliers' factories, breaking bottlenecks on their assembly lines so his plant isn't caught short. "We are increasing our volumes sometimes quicker than the entire supply base can keep up," he said.
Ryska: "We're doing this right here in the middle of all the things the country says is bad. It's not all bad. This is proof."
Photo credit: BLOOMBERG
Beacon for Detroit
As Ryska's factory produces a shiny new Jeep a minute, the car carriers hauling them away drive through some of the most destitute streets of a broken city.
Detroit, overwhelmed with $18 billion in debt and intractable unemployment and crime, became the largest municipal bankruptcy in U.S. history when it filed Chapter 9 on July 18.
Detroit's homicide rate rose in 2012 to its highest level in 19 years, as 386 people were killed, many in the city's east-side neighborhoods that surround Jefferson North.
"I've seen just about everything you can imagine on my way into work: fires, ambulances, police cars, car crashes, burned-out buildings," Ryska said.
"Once you cross the threshold onto the plant, it's absolutely different."
Ryska hopes the difference Jefferson North represents can be an example for Detroit. "We're doing this right here in the middle of all the things the country says is bad," Ryska said. "It's not all bad. This is proof."
Crime crossed the threshold of Jefferson North last year when an employee stabbed a co-worker to death near a loading dock and later took his own life at a park across Jefferson Avenue from the plant.
Ryska, only eight months on the job, helped to manage the scene and soothe traumatized workers.
Setbacks, Ryska has learned, provide the greatest lessons. It's like what Chrysler said in its famous Eminem Super Bowl ad:
"It's the hottest fires that make the hardest steel."
"We don't talk about bankruptcy every day, but we all went through that experience," Ryska said. "We all felt the same thing. We all got up in the morning and said, 'What is it that I have to do to provide for my family?'"
On his key chain, Ryska still carries the keys to the first factory he managed, Chrysler's Twinsburg, Ohio, stamping plant.
The factory has been demolished since it closed in 2010. Even though the plant was doomed when Ryska went there in 2007, he convinced workers to transform it from one of Chrysler's worst performers to one of its best. Some of those workers are with him at Jefferson North.
"I kept the keys just as a reminder that you can go into a situation where people have written you off and you can still be successful and you can still turn it around, regardless of what people say about you," he said. "It's kind of a reminder to me of the story of Chrysler in 2009."
About this series:
Tuesday: How U.S. workers rebuilt the U.S. auto industry
Wednesday: For Detroit 3, obstacles were closer than they appeared
Today: Recalled -- insourcing workers from Detroit
Friday: Differential -- the divide over wages and 5 scenes of new life in DetroitContact Automotive News