c. Paula Reiker
d. David Delainey
Lee Iacocca, chairman and CEO of Chrysler Corporation, announced on January 27,
1988, that the automaker would be closing its Kenosha, Wisconsin, plant. Iacocca and
his board of directors were under significant pressure from shareholders due to
Chrysler's continuing poor financial performance. Chrysler had acquired the Kenosha
plant when it purchased American Motors Corporation in 1987. In his announcement,
Iacocca blamed national trade policy for Chrysler's declining sales and resultant
At the Kenosha plant, which manufactured the Dodge Omni and the Plymouth Horizon,
5,500 of the 6,500 workers were to be laid off and production moved to a Detroit plant.
Kenosha, a city of 77,000 on the shores of Lake Michigan, depended heavily on
The announcement of the closing came at a critical time. Chrysler was negotiating to
renew its contract with the United Auto Workers (UAW). Also, the Kenosha plant
carried a history of union financial assistance. The UAW had loaned American Motors
over $60 million to keep the Kenosha plant running, and Chrysler had assumed the loan
obligations as part of the acquisition. Also, Wisconsin had paid $5 million for job
training at the Kenosha plant in 1987 after Chrysler promised that the plant would build
Omnis and Horizons for at least five more years.
Peter Pfaff, a member of the UAW Local 72 of Kenosha and an employee at the plant
since 1972, said: "I was there. We"ve got it on tape and in writing. They said they"d
stay. Greenwald (then Chrysler Motors chairman) keeps saying Chrysler never said that,
but I was there when he said it."
The Kenosha local threatened to delay negotiations on renewing the national contract
with 64,000 workers. After the threat, Iacocca announced that Chrysler would establish
a $20 million trust fund to aid the 5,500 Kenosha workers through housing payments
and educational funding. This fund would be in addition to severance pay, extended
unemployment benefits, and repayment of the UAW loans. While denying that Chrysler
was setting a precedent, Iacocca declared it had a "moral obligation" to Kenosha.
Wisconsin threatened to sue Chrysler over the job training program but agreed to hold
off in exchange for Iacocca's promise to extend production at the plant for several
months into the fall of 1988.