DETROIT (Reuters) - Chrysler Group broke ground on a $700-million axle plant in Michigan on Monday, the automaker's first major investment since it was sold to Cerberus Capital Management last week.
The Chrysler plant in Marysville, Michigan is part of a $3 billion investment program announced in February to help make more fuel-efficient vehicles.
Chrysler executives have insisted construction of the axle plant and a $730-million engine plant being readied in Trenton, Michigan, would go ahead even after the company shifts to private ownership under Cerberus.
Some analysts had suggested that both investments could be reviewed by Cerberus, which agreed to acquire Chrysler in a $7.4 billion deal from current parent DaimlerChrysler AG.(DCXGn.DE: Quote, Profile , Research)
Chrysler Chief Executive Tom LaSorda said after the announcement of the sale that Chrysler's new owner had signed off on its planned investment and a cost-cutting plan announced with it in February.
The Chrysler restructuring plan is aimed at restoring the company to profitability by 2008 and includes 13,000 job cuts and the closure of an assembly plant dedicated to the slow- selling Dodge Durango sport utility vehicle.
Chrysler said construction of the Marysville plant would begin this summer. It projects the plant will employ 900 workers when it reaches full volume in 2010 and produce 1.2 million axles per year.
The United Auto Workers union, which represents almost all of Chrysler's roughly 50,000 U.S. factory workers, has endorsed the sale to Cerberus and hailed the new axle plant.
"The investment in Marysville is a great start for the new Chrysler Corporation," UAW Vice President General Holiefield said in a statement. "It shows that when we work together, we can preserve good-paying manufacturing jobs in the United States."
Holiefield will lead contract talks with Chrysler as part of a round of negotiations between the UAW and the Detroit- based automakers to replace pay and benefit deals that expire in September.