Incentives Deal of the Month
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Powered by $115M in Incentives, Chrysler-Led 400-Employee Engine Plant Michigan-Boundby JACK LYNE, Site Selection Executive Editor of Interactive Publishing
AUBURN HILLS, Mich. Powered in part by a state and local incentive package valued at US$115 million-plus, Michigan has gotten the nod for the Chrysler/Hyundai Motor/Mitsubishi Motors 400-employee engine plant a project that marks a major step in advancing the innovative global manufacturing partnership.
The three-company auto alliance has picked a 260-acre (104-hectare) site in the small village of Dundee, Mich., said officials at Chrysler (www.chrysler.com), the lead company in the tri-partite partnership. The 450,000-sq.-ft. (40,500-sq.-m.) plant in Dundee a village of 3,600 residents sitting 58 miles (93 kilometers) southwest of downtown Detroit will produce 600,000 four-cylinder aluminum engines a year, Chrysler officials explained in DaimlerChrysler's Auburn Hills, Mich., U.S. headquarters.
As reported in Dec. 2's Project Watch, the Detroit and Toledo, Ohio, areas were the early frontrunners for the plant. Locations near existing operations had an obvious edge in securing project short list spots. The Global Engine Alliance between Chrysler, Hyundai and Mitsubishi specified that it wanted an area that could supply all three firms' U.S. plants. As DaimlerChrysler CEO Dieter Zetsche indicated in December, the partnership's preference was for "some place in the Detroit area or Ohio . . . locations driven by logistics."
An undisclosed Indiana area was also a major contender for the project, according to Michigan economic development officials.
The chosen site almost went all the way to Ohio. Dundee lies less than 20 miles (36 kilometers) from the Buckeye State's border.
Collaboration Included IncentivesCollaboration between state and local agencies, as well as with the United Auto Workers (www.uaw.org), was essential in the alliance's site pick, Chrysler and government officials agreed.
"There are three main ingredients to moving this project forward: the people, the place and the products," Zetsche said at the site-selection announcement. "Everyone worked to bring these ingredients together in the most productive way."
"I'm proud and encouraged by the collaboration between the state and local governments and other partners that has successfully attracted this job-producing project to Michigan," Gov. Jennifer Granholm (D) said in Auburn Hills.
State-local collaboration extended to the incentive package, which has a value exceeding $115 million, reported state Department of Community and Industry Services David Hollister. Key elements in the Global Engine Alliance's incentive package include:
UAW Not Automatic Representative, Union AgreesState collaboration on the project spanned two gubernatorial administrations in Michigan. John Engler (R) vacated the governor's mansion in Lansing at the end of 2002, prevented from seeking re-election by state term limits.
"I'm very happy to be able to make this announcement barely six weeks into this administration," Granholm said.
Labor cooperation was perhaps even more critical in Michigan's securing the auto alliance project. Since the new operation includes three separate companies, the UAW had to accept the fact that it won't automatically rank as the plant's designated labor representative. Similarly, laid-off UAW members won't be guaranteed hires at Dundee.
UAW Vice President Nate Gooden sounded a cooperative note at the project announcement ceremonies.
"This new plant will provide an excellent opportunity for Michigan workers to demonstrate their talents, hard work and dedication," he said. "We look at this as another way to build a future for Michigan's working families and their communities."
But the UAW, Gooden added, won't be a passive player.
The auto workers union, he said, is hoping that the Global Engine Alliance will recognize the UAW through card-check organizing, not a federally monitored vote. "If not," Gooden added, "then we're going to have to do it the hard way."
The plant will employ 172 workers in its first year of operations in 2005, Zetsche said. Employment will expand to 400 workers over a five-year span, he explained.
CEO: 'Truly Innovative Manufacturing Environment'Formed in May of 2002, the Global Engine Alliance is projecting annual worldwide production capacity of more than 1.5 million units. If it hits that volume, the tri-partite pact would rank as one of the world's biggest producers if not the biggest of a single family or design of engines.
The alliance's first products, however, won't be Michigan-made. Both other partners will make the same engine first, beginning next year in existing plants. Hyundai will choose a South Korean plant, while Mitsubishi will be manufacturing in Japan.
The Dundee plant, though, retains a unique niche: It represents the first time that the three alliance partners will meld production procedures under one roof.
The United States is "the only place where we might consider whether it makes sense [to do] any kind of manufacturing joint venture," Zetsche explained in December. Japan and Korea don't offer similar opportunities for a manufacturing collaboration, he said.
The three companies must still work out the particulars of meshing their processes. The Dundee plant will employ what Chrysler officials called "cross-functional team participation." Each company will be assigned the lead role in specific areas, including plant development planning and implementation, facility layout, production processes, and work-force strategy.
"Upon completion of the plant, we will begin producing world-class engines in a truly innovative manufacturing environment," Zetsche said. "This operation will clearly take advantage of the strengths of each alliance partner . . . [and offer] significant cost advantages."
Hyundai and Mitsubishi will each take 30 percent of the Michigan plant's output for use in their North American-made vehicles, Chrysler officials said.
Chrysler owns some 37 percent of Mitsubishi and some 10 percent of Hyundai.
©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.