Fiat Chrysler announced recently that it will cut third shift operations at its Belvidere production facility in May. The plant produces the Jeep Cherokee. The company cited global demand as part of the reason. On this week's Friday Forum, we learn how the decision could have a much larger ripple effect on the economy.
The shift change will affect 1,371 jobs.
Brian Harger is a researcher with the Northern Illinois University Center for Governmental Studies. He predicts the economic impact of the decision will be felt, but also expects laid off workers to be in hot demand so they'll probably land on their feet.
It's not the first time Chrysler scaled back operations in Belvidere. More than a decade ago, Harger rananimpactanalysisonwhatcutting third shift operations would mean to the northern Illinois economy.
In addition to the direct loss of jobs, he studied the extent of "indirect" losses.
"Thatwillprobablybethenextstory;suppliersovertimebeingeliminatedandeventuallyjobsbeingeliminated," Harger said.
These could include hauling contractors and suppliers for individual components like doors and tires.
"Generally, theautomanufacturerwantstohavethosekeysuppliersclosetothemsothattheycandeliveralmostimmediatelytotheplantbasedontheday'sproduction."
His model estimates an additional 1,332 indirect job losses over time.
The lay-offs hit the area's skilled workers which Harger says will lead to "induced" losses on local spending. This could affect healthcare providers and retailers.
"Each of those employees has afairlyhighdisposableincome," Harger explained. "Obviously iftheylosetheirjobortheygettransferredtoanotherplantthatincomeleavesthearea."
Harger estimates total GDP losses to be around $466 million.
"That sounds like a huge figure, but itactuallyrepresentsabout1.4 percent oftheregion'stotalGDP," Harger said. "Sowhilethisisasignificantlossoftheeconomy, Iwouldnotcategorizeitasafatalepisodebyanymeans."
He says the business climate is also different this time around.
"ThisisgoingonatthetimewhenIthinktheregionaleconomyisalotstronger," Harger added. "Theregionaljobmarketisalotstrongerthanitwasin2006orin2009, whentheplantandthecompanywereinserioustrouble."
He says many of the workers have skills transferable to a growing market.
"Alotoftheskillsetsofautoworkerscompareprettyfavorablytoworkersintheaerospaceindustry," Harger noted. "So it'sprobablethatsomeofthosepeoplewillgetabsorbedthereeventually."
Still, Harger thinks the timing of the announcement was troubling.
"IthinkitwasprobablyunfortunatethatChryslerannouncedthaton thesamedaythattheyannouncedthattheyweremakinginvestmentsintotheirplantsinMichigan," he said.
Harger's best guess is that it's lessreflectiveoftheBelvidereplantortheIllinoiseconomyand more of what'sgoingonintheautoindustryoverall.
