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Plant Construction Means New Owners Have Faith

Tue June 05, 2007 - Midwest Edition

ST. CLAIR TOWNSHIP, Mich. (AP) If there was any apprehension about his company being owned by a private equity firm, General Holiefield wasn’t showing it during a groundbreaking ceremony for a new Chrysler plant.

Holiefield, the United Auto Workers’ (UAW) Chrysler Division vice president, along with Chrysler and governmental officials, heralded the new axle plant as a sign that the soon-to-be new owners, Cerberus Capital Management L.P., have faith in the automaker’s turnaround plan.

When Chrysler was taken over by Daimler-Benz AG in 1998, Holiefield said, workers had the same fears of the unknown that they do now. But at that time, he was optimistic, as he has been since the announcement that Daimler would sell Chrysler to Cerberus in a $7.4 billion deal.

He knows there might be some bumps ahead as the UAW negotiates a national contract with the new Chrysler. But he said he came away from a meeting with Cerberus officials thinking that the two sides will work well together.

“That relationship with Cerberus, as far as I’m concerned at this point in time, is alive and well with the UAW, and I look forward to working with them,” he said after the ceremony on a field just outside the Marysville city limits, approximately 50 mi. northeast of Detroit.

Holiefield wouldn’t answer questions about whether the UAW would give Chrysler the same health care concessions that it gave GM and Ford, nor would he talk about any effort by Chrysler to negotiate a way out of its estimated $19 billion long-term retiree health care liability.

Instead, he pointed to construction of the $700 million plant, which replaces an outdated factory in Detroit, as a sign that Cerberus is interested in keeping Chrysler competitive. He and others also said they were happy that Chrysler was again an American company.

Construction should begin in earnest in June, with axles coming off the line sometime in 2010, Chrysler said.

Chrysler also will break ground on a new engine plant in the Detroit suburb of Trenton on May 23, and it said it will announce several more plant investments in the coming weeks. The locations were not disclosed.

Chrysler said in April that it would spend $1.78 billion on transmission and engine facilities, including the Marysville and Trenton plants as well as a new $300 million paint shop at its assembly plant in Sterling Heights and a $50 million investment in its Warren stamping and assembly complex.

The axles made at the new plant, which also will be sold to Mercedes-Benz, will make cars more fuel efficient, said Frank Ewasyshyn, Chrysler’s executive vice president of manufacturing.

Unlike other automakers who are outsourcing parts such as axles, Chrysler wanted to keep them in-house because it has exclusive technology, he said. The axles will make cars more efficient by reducing friction and heat in sending power to the wheels, he said.

The new axle plant will replace the Detroit Axle plant, which was built in 1917 and now employs more than 1,600, and the engine plant will replace the current engine plant in Trenton, which also employs approximately 1,600 people.

The new Marysville plant will employ approximately 900 workers, while the new engine plant will employ approximately 485, the company said. The net job loss is approximately 1,465 because approximately 350 workers at the existing Trenton and Detroit Axle plants are expected to take buyouts or early retirement offers under the restructuring plan.

The Detroit Axle plant makes front- and rear-drive axles for many Chrysler truck products as well as trailing axles for Dodge and Chrysler minivans. It also manufactures powertrain components for the Chrysler 300, Dodge Magnum and Dodge Charger cars, according to the company’s Web site.

The Trenton plant will make a new generation Chrysler V-6 engine.

Edward May, president of UAW Local 961 at the Detroit Axle plant, said workers there agreed to work rule changes allowing them to do multiple jobs and work in teams. Chrysler had said the changes were essential to building the new plant. Even though the new plant will employ far fewer workers, the plant’s work force should shrink through renewed retirement and buyout offers so that all the remaining workers have jobs at the new factory, he said.

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