Tuesday, March 22, 2005

Chrysler saves 5,000 Metro jobs

Sterling Hts. plants to get $507 million redo; Japanese-style team rules to be adopted.

By Brett Clanton / The Detroit News

Sterling Heights Assembly Plant Products: Dodge Stratus, Chrysler Sebring sedans, Chrysler Sebring convertible Employment: 2,951 Size: 3 million square feet History: Opened in 1953 as jet engine factory. Converted to automobile plant in 1980 by Volkswagen. Purchased by Chrysler in 1983. Sterling Stamping Products: Hoods, deck lids, roofs, quarter panels, liftgates, floor pans, fenders, other parts Employment: 2,491 Size: 2.7 million square feet History: Opened in 1965 Error processing SSI file Comment on this story Send this story to a friend Get Home Delivery

Chrysler today is expected to announce it will invest $506.8 million to renovate two Sterling Heights factories to prepare the plants to build a new line of midsize sedans beginning next year. The project will secure more than 5,000 Metro Detroit manufacturing jobs.

DaimlerChrysler AG's Chrysler Group and the United Auto Workers union are also expected to announce the signing of labor agreements at the plants that provide for team-based work rules similar to those in Japanese plants.

Chrysler has been working with the UAW to secure such agreements to match the efficiency of Asian automakers, who lead the industry in productivity. But the agreements are controversial among rank-and-file workers, who often see them as a threat to job security.

The renovations at the Sterling Heights assembly plant and stamping plant are the latest the automaker has made to North American factories in recent years to modernize operations. It hopes to match Japanese rivals in factory efficiency by 2007.

"The announcement represents a major manufacturing investment on the part of the Chrysler Group," said David Elshoff, a Chrysler spokesman.

"It's good to be able to retain important manufacturing jobs in Michigan."

Chrysler officials declined to release specifics of the project until today, but documents filed with the state and city of Sterling Heights reveal the scope of the project.

The automaker is expected to spend $278 million at the Sterling Heights assembly plant -- which builds the Dodge Stratus and Chrysler Sebring sedans and Sebring convertible -- to upgrade the body and paint shops and replace tooling and robots.

Chrysler will spend another $228 million at a Sterling stamping plant on robots, tooling and dies.

The projects will prepare the plants for the production launch of the next generation Stratus and Sebring sedans, which are expected by late summer 2006.

While Michigan has lost more than 175,000 manufacturing jobs since January 2001, Chrysler remains committed to the region. Last week, the city of Sterling Heights approved property tax abatements for the projects. It checked off on an eight-year waiver for Sterling Stamping that will save Chrysler $1.5 million and a 12-year waiver at Sterling Heights Assembly that will save $16.3 million.

Last month, state officials awarded Chrysler an $18.8 million single business tax credit and a $500,000 job training grant to lure the project. Chrysler had said it was considering other North American sites for the work.

Such incentives are part of the price of keeping big companies like Chrysler in the state, said Larry Gormezano, manager of the Michigan Economic Development Corp.'s Livonia office, during a March 15 meeting of the Sterling Heights City Council.

"Nowadays, we can't assume anything about any company. Every company has to be looking at costs."

The Sterling Heights City Council, in a staff report last week, offered new insights about the midsize cars to be built at Sterling Heights Assembly, which have not been shown to the public.

The report says three midsize models will continue to be assembled at the plant. But the new vehicles will be "five inches taller and three inches wider" than the models they replace, making it necessary to replace much of the plant's tooling. The models will ride on an underbody that was jointly developed with Japan's Mitsubishi Motors Corp.

They will also be produced with an all-wheel-drive option and available diesel engine, said the report.

"The timing for the redesign is very good," said Jeff Brodowski, an auto analyst with J.D. Power and Associates in Troy, explaining that Chrysler's midsize cars have been overshadowed in recent years by new vehicles such as the Chrysler 300 sedan and Jeep Grand Cherokee.

Chrysler's Sterling Stamping plant will be prepared to make body stampings for the new midsize cars and also for the next generation Jeep Liberty SUV and 2006 Dodge Ram pickup.

The renovations at both plants assure that new work will come into the factories for several years, which will secure 5,123 jobs in Metro Detroit for the time being.

Union workers at the plants agreed to new work rules that require small work teams and set a framework for fewer job classifications, which Chrysler believes will streamline operations and give the automaker more flexibility to respond to changes in the marketplace.

"Labor agreements such as these . . . prove that our UAW employees are innovating to take on the best of the (foreign manufacturers) in terms of work rules, flexibility, productivity and quality," Chrysler CEO Dieter Zetsche said in a speech to the Detroit Economic Club on March 14.

UAW Vice President Nate Gooden, who directs the union's DaimlerChrysler department, told union leaders in Las Vegas this month that more changes will be needed if the automaker is going to compete with Toyota. He called on colleagues to be open to the challenge.

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.