Economy Detours Proposed Assembly Plant

Chrysler Group President and CEO Dieter Zetsche said a proposed new manufacturing facility, incorporating innovative supplier initiatives for Windsor, would not be built because of business viability issues.

A Chrysler Group project team had been put in place last year to explore the plant's viability with potential suppliers and governments. This particular project would have involved building a state-of-the-art assembly plant, with major parts of the production process--possibly including paint and body shops, as well as chassis assembly--turned over directly to suppliers. The suppliers would then have been responsible for some of the investment funds, hiring of employees and managing their own areas of the plant.

However, the business environment has significantly changed since last October, said Zetsche. "The state of the automotive market has created a formidable hurdle," he said, "especially for a small, entry-level vehicle such as the one we were considering. Additionally, competitive pricing, ongoing incentives and increasing overcapacity in North America led us to conclude that this is not the time to add new capacity."

Zetsche credited the efforts of the Canadian Auto Workers, the provincial and federal governments in Canada that discussed their potential role in the project, as well as the suppliers that were interested in managing significant parts of the production process."Everyone gave it his best, but after careful examination, we couldn't reach an economically viable business case," said Zetsche.

The project's business model is one example of the Chrysler Group's efforts to venture in a new direction in manufacturing flexibility, explore fluctuations in market conditions and launch new products, while lowering its overall investment in vehicle programs.

Zetsche added that even though a viable business case could not be made, the business model followed on the project is worth considering for the future.

Zetsche also said that $1.4 billion, in Canadian dollars, would be directed into the Brampton Assembly Plant for the next generation of full-size sedans going into production early next year, including the recently announced Dodge Magnum and Chrysler 300C. This is part of a total investment of $2.6 billion between 2002 and 2005 in existing Canadian operations.

In addition to the Brampton investment, Zetsche pointed out that $460 million had already been invested at a current Windsor assembly plant, for the recently launched Chrysler Pacifica.