After a rocky nine year partnership, DaimlerChrysler is once again an American company. About 80 percent of Chrysler group is now sold to Cerberus Capital. That's a private equity fund that buys struggling companies and works to turn them around. The auto industry is shaken by the sale and the reverberations are loud and clear here in the Stateline.
One of the least successful auto mergers ever has come to a screeching halt. DaimlerChrysler sold the lions' share of Chrysler to Cerberus for $7.4 billion. Compare that to the $36 billion the German company paid for Chrysler back in 1998. But despite feeling lighter in the wallet, DaimlerChrysler leaders say they're confident about the company's future.
"With this transaction we have created the right conditions for a new start for dailmler and chrysler," says DaimlerChrysler's CEO Dieter Zetsche.
Optimism is a rarer commodity right now at the Chrysler assembly plant in Belvidere.
"I'm not happy at all. We may lose a lot of jobs, a lot of cuts," says Belvidere Chrysler worker Erica Wilcox.
Belvidere worker Gerald Koplin says, "I'm kinda concerned because i'm worried about the insurance and all that stuff what they're gonna do with it."
DaimlerChrysler, which will retain a 19.9 percent stake in the company, now to be called Chrysler Holding L.L.C., has pledged it won't be laying off any more workers. This after the February announcement 13,000 jobs are on the way out nationally.
The company also says Chrysler will continue to provide the hefty pensions and health care benefits it offers now. However, analysts say that will be difficult given that Cerberus will likely have to cut costs to get Chrysler back on the road to success.
"When you get to the benefits, that's what essentially doubles the labor costs," says John McElroy, host of Autoline Detroit, the nation's longest running weekly program discussing the inner workings of the auto industry.
Cerberus will now assume Chrysler's estimated $18 billion in healthcare costs for current employees and retirees. Many of those employees say this feeling of uncertainty is getting all too familiar.
"There's always concerns every time you go to work in the auto industry," says Belvidere Chrysler worker Jon Parks.
They just hope it won't be enough to cut the engine on their livelihood.
National contract talks between the United Auto Workers and the big three U.S. automakers Chrysler, Ford and General Motors are set to begin in July. All three say they need lower labor costs to compete globally.
DaimlerChrysler registered a $680 million loss last year. So Mark Williams of Belvidere's economic development group Growth Dimensions says the sale creates a financially stronger employer for the city. He and Belvidere's Mayor Fred Brereton also say they're confident about the Belvidere plant's stability because the cars produced there, like the Caliber, are selling well. Belvidere has not been threatened with the layoffs impacting plants across the country.