Article published November 18, 2009
Chrysler boosts Dundee plant; engine line to gain jobs, add output
Dundee workers will build the Fiat 1.4 liter engine, seen as a key to the company's future.
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THE BLADE
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By LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER
DUNDEE - Chrysler Group LLC plans to invest $179 million and create 155 jobs at its Global Engine Manufacturing Alliance plant in Dundee over the next five years.
It plans to build its advanced 1.4-liter engines there for the automaker's line of small vehicles.
Michigan officials approved $4.6 million worth of incentives yesterday to assist the opening of the southern half of the facility, which has been effectively mothballed since the northern half began manufacturing engines in 2005.
The Michigan Economic Development Corporation estimates increased economic activity from the project will create another 420 indirect jobs.
In a written statement, the automaker, now being managed by Italian automaker Fiat SpA, didn't commit to ramping up production at the Dundee facility, although officials at the plant said work has begun on the project.
"Chrysler Group LLC appreciates the actions of the Michigan Economic Growth Authority in support of the company's efforts to bring new business and jobs to Michigan. Several steps remain in the process, however, and we look forward to working with state and local officials to make this project a reality," the automaker said.
The state-approved tax credit was to encourage the firm to locate the engine jobs in Dundee instead of a competing site in Mexico. The Dundee village council will consider a local abatement in support of the project at its meeting Dec. 8.
The Dundee plant has been named the most productive engine plant in North America by the prestigious Harbour Report for two straight years. The plant - which builds four-cylinder engines ranging in displacement from 1.8 to 2.4 liters - took 1.79 hours to produce each engine in 2008.
State officials said the opening of the southern half of the facility would increase production by up to 250,000 engines annually.
It has the capacity to build as many as 450,000 engines annually for the Chrysler Sebring and Sebring convertible, Dodge Avenger, Caliber, and Journey, and Jeep Compass and Patriot.
State officials said average weekly wages for the new jobs will be $916. The majority of the 250 current employees are represented by United Auto Workers Local 723. Hourly workers at the plant must hold either a technical associate's degree, a journeyman's card in a skilled trade, or five years of machining experience.
On Sept. 4, 2008, the Dundee facility produced its 1 millionth engine, just three years after it opened.
"We've got a small contingent of launch people over there already working," said Tommy Zimmerman, plant unit chairman of Local 723. The added jobs would about double his membership.
Short term, he said, is getting 46 of his members now on layoff back to work, which he said could take place next spring.
"To get these guys back to work is just going to be a godsend," Mr. Zimmerman said.
When Chrysler senior management outlined this month its five-year business plan, its powertrain division leader spoke extensively about plans to downsize the automaker's range and size of engines, to increase both profitability and efficiency.
One of the keys to that strategy revolves around using Fiat engine designs, specifically its 1.4-liter Fully Integrated Robotized Engine to boost power ratings and increase the automaker's fleet fuel efficiency rating while reducing emissions.
The engine's first use domestically will be in the Fiat 500 minicar that is to be built in Mexico and sold by Chrysler dealers in the United States late next year, Chrysler officials said.
Kim Korth, an auto industry analyst with IRN Inc. in Grand Rapids, Mich., said that if Chrysler goes through with plans to consolidate its small engine manufacturing in Dundee, the plant would be poised to power Chrysler's revival.
"As we heard during the presentation of their business plan earlier this month, engines are a big part of their future, and the fact that they're going to build them in that plant bodes very well for the future."
During bankruptcy hearings this year, Chrysler executives indicated that the automaker, with Fiat, would focus its future small-engine production at the 900,000-square-foot Dundee plant.
In August, Chrysler dissolved its former Global Engine alliance with Japanese automaker Mitsubishi Motors Corp. and Korean automaker Hyundai Motor Co. The three automakers had shared engine component designs, though each of the three maintained engine manufacturing in their own nations.
Dundee Village Administrator Patrick Burtch said the village council will consider a 12-year, 50-percent abatement on personal and real property for new equipment at the plant next month.
"If they decide to come here, the effect for the village would be substantial," he said.
"The village had sold bonds for the first facility, and when the economy went down, Chrysler couldn't continue with the investment."
The additional investment would ease that financial burden on the community's 4,500 residents, he said.
Contact Larry P. Vellequette at:
lvellequette@theblade.com
or 419-724-6091.
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