Thursday, May 24, 2007

Chrysler engine plant work starts

Fuel-efficient V6s to be made in Trenton

At a time when gas prices hover near $3.50 a gallon, the Chrysler Group broke ground Wednesday on a crucial piece of its plan to begin building more fuel-efficient vehicles.

A new $730-million engine plant in Trenton is part of Chrysler's $3-billion plan to produce more efficient powertrains.

The Auburn Hills automaker, saddled with a truck-heavy lineup, is working to broaden its vehicle range, too, even as it is being sold to private equity firm Cerberus Capital Management and aiming to make money again by 2008.

The 822,000-square-foot facility will make a new V6 engine family called the Phoenix, which will replace four current V6 engine variations.

"You've got to give the customer what they need, obviously, in the way of performance, and at the same time you've got to be more fuel efficient. That's what this engine does," said Frank Ewasyshyn, Chrysler executive vice president for manufacturing.

The new plant is expected to be running in 2009. The company has not announced which products will have the Phoenix engine.

Look for it in the company's minivans, midsize trucks, SUVs and new crossover vehicles, said Erich Merkle, director of forecasting for IRN Inc.

"You're going to see those engines become used pretty widely for those applications," Merkle said. "If you can get a 15 to 20% bump in fuel efficiency, that's meaningful. In a really competitive environment, other automakers are making strides to become more fuel efficient because that is one area where you can gain an advantage over your competition."

Getting a more fuel-efficient V6 engine in trucks is a smart move, others agreed.

"The American market reflects the fact that consumers are not just interested in a small sedan. Fuel-efficient needs ... still don't change the fact that Americans want their bigger vehicles," said Catherine Madden, an auto industry analyst with Global Insight.

Another part of Chrysler's strategy is to get into the small-car market using an alliance with a Chinese carmaker.

Late last year, Chrysler and Chery Automobile Co. agreed to the framework of a deal for Chrysler to sell Chery-made cars in North America under a Chrysler Group nameplate, a way for the Auburn Hills automaker to enter the market without all of the expense.

Chrysler and Chery are in talks to cement the agreement, a situation made more difficult in light of the Feb. 14 move by DaimlerChrysler to sell Chrysler.

Chrysler has also announced plans to offer a 5.7-liter Hemi hybrid next year in the Chrysler Aspen and Dodge Durango SUVs. The company says the new SUVs will get nearly 40% better mileage while driving in the city.

Meanwhile, the current Trenton engine plant is expected to be idled in 2014 or 2015. It currently employs about 1,600 people.

The new facility will have about 600 people, UAW officials said. The average weekly wage of those jobs is expected to be $1,043, according to state records.

To help ensure that the new plant would stay in Trenton, UAW workers at the factory approved changes to workplace rules last year that aim to ease restrictions on job classifications and work schedules.

UAW Local 372 President Bryce Cobb Jr. takes some comfort that workers will be making more fuel-efficient engines when gas costs are on people's minds.

"It's smart for America, and it is smart for the industry," he said.

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