Chrysler to build plants, ax 1,800 jobs

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2:21 p.m.

DETROIT (AP) -- DaimlerChrysler AG's Chrysler Group plans to build two new plants in Michigan and upgrade three others, but because the plants will be more efficient, there will be a net loss of about 1,800 jobs.

The $1.78 billion investment, announced today, includes a new $700 million axle plant in Marysville near Port Huron and a new $730 million plant in Trenton to build the next-generation Chrysler V-6 engine, company spokesman Mike Aberlich said.

The company plans to build a new $300 million paint shop at its Sterling Heights plant, where it makes the Chrysler Sebring and Dodge Avenger. The company also will announce a $50 million investment in its Warren stamping and assembly complex, which makes the Dodge Ram and Dakota pickup trucks. A new version of the Ram is coming in 2008, the company has said.

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

The new Marysville plant will employ about 900 workers, while the new engine plant will employ about 485, the company said.

Chrysler Chief Executive Tom LaSorda said the reduction in the work force would be in addition to the 13,000 white- and blue-collar workers the company plans to shed with buyouts and early retirement packages, but he said he did not know if more buyout offers would be necessary.

Members of United Auto Workers Local 961 at the Detroit Axle Plant have been voting on new work rules that the company says are essential to building the plant, allowing employees to work in teams and do multiple jobs. The rules are similar to those approved by the union before Chrysler built a new four-cylinder engine plant.

The Detroit Axle Plant makes front- and rear-drive axles for many Chrysler Group 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.

Chrysler bought the Detroit Axle Plant in 1928 and has expanded it at least seven times since the purchase.

Announcement of the new plants comes as Chrysler's German parent talks with potential buyers for its U.S. operations.

Chrysler officials said they must modernize their facilities to become more competitive. The new axle plant, complete with robotics, will enable the company to do the same work with fewer employees.

"The business has a responsibility to keep running" despite the sale talks, Mr. LaSorda said yesterday.

The new investments will help Chrysler roll out products with great fuel efficiency and performance, he said, and are part of Chrysler's commitment to invest $5.8 billion to $6 billion per year in its operations.

He also said he expects the flexible work rules to spread to all Chrysler plants.

"It's just a function of competing in the worldwide market," he said.