Chrysler plant to get update

$280.6M investment will boost Jefferson North to produce new Grand Cherokees, 2 future models.

Eric Morath / The Detroit News

Chrysler LLC is expected to invest $280.6 million to upgrade its Jefferson North Assembly Plant in Detroit to produce the next generation of the Jeep Grand Cherokee and two new models at the facility.

The investment -- largely for equipment and technology improvements -- would create 419 new jobs and the updates are expected to be completed in June 2010, according to documents filed with the City of Detroit.

The Detroit City Council was scheduled to discuss a tax exemption Chrysler is seeking for the project at a meeting today. However, the item was requested to be removed from the agenda so Chrysler could provide the city with more details about its plans.

" We do plan to make this investment," Chrysler spokeswoman Curtrise Garner said Tuesday evening.

She said the City Council's request for more details on the operation of the plant and the demographics of its workers -- current and future employees -- delayed the presentation.

Garner said the delay should not push back plans to bring in new machinery and equipment in July. She said securing the tax-break is essential to Chrysler making the investment, and she did not expect any difficulty in securing an exemption.

"We've enjoyed a great relationship with the city of Detroit," she said. "We look forward to making future investments in the city."

The matter should be back on the council's agenda in the next few weeks.

The $280.6 million investment is slated for "the acquisition of machinery and equipment to manufacture and assemble the next generation of the Jeep Grand Cherokee sport-utility truck at the Jefferson North Assembly Plant," documents filed with the city in October stated. Those documents said "two new future models" also will be produced at the plant -- Chrysler would not divulge further details. Plans also call for increasing plant capacity and making operations more flexible to produce different types of vehicles.

In January, the city Planning and Economic Development Department determined Chrysler's investment met the criteria for a tax exemption and forwarded the request to the council.

Chrysler filed investment plans last fall, just days after it reached a tentative agreement with the United Auto Workers union on a historic new contract. With that cost-cutting agreement, Chrysler promised investment and future products at four plants, including Jefferson North.

In late October, the state approved a $4 million tax credit for what was at the time a proposed $366 million project at Jefferson North. Garner said the discrepancy between the two investment numbers reflects different criteria considered by the state and the city, and not necessarily a reduced level of investment.

City documents did not detail the value of the exemption, but last October state officials said the city was considering a $40.2 million tax abatement.

Chrysler's $280.6 million investment is specific to tooling and machine improvements, including an improved paint shop, new conveyor system, chassis assembly and line upgrades.

The plan to add 419 jobs at the factory comes weeks after Chrysler eliminated a 900-person second shift at the plant. Some of those workers were laid off, while others accepted buyouts or early retirement packages. Jefferson North employs nearly 1,500 workers and produces the Grand Cherokee and Jeep Commander.

Retaining auto jobs in the city is a much-needed win, said Comerica Bank economist Dana Johnson. However, he said that while the investment will improve technology, the plant will need fewer workers than in decades past.

"This is exactly the success that needs to happen if we're going to see the city rebuild," he said. "If Michigan wants to continue to be a node of auto manufacturing facilities, they need to maintain their critical mass."