Dual launch celebrates Chrysler's comeback
From the Detroit Free Press:
Dual launch celebrates Chrysler's comeback
August 26, 2004
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
The Chrysler Group simultaneously launched two completely redesigned trucks Wednesday -- the long-awaited Jeep Grand Cherokee SUV in east Detroit and the Dodge Dakota pickup in Warren -- in an announcement that highlighted the automaker's commitment to the region, its UAW workforce and its building momentum in the marketplace.
The Grand Cherokee and Dakota cap off a successful year of nine new product launches for the Auburn Hills-based division of DaimlerChrysler AG, which is based in Stuttgart, Germany. Chrysler Group sales are up 3 percent this year.
Employees at the Jefferson North Assembly Plant in Detroit and the Warren Truck Assembly Plant gathered around a podium and movie screen in their plants, where events at one facility were broadcast to the other. Gov. Jennifer Granholm arrived in a Dakota in Warren while Detroit Mayor Kwame Kilpatrick arrived at the Detroit plant in a white Grand Cherokee.
At a time when concern over the loss of manufacturing jobs continues mounting, the significance of the dual announcement, by Chrysler Chief Executive Officer Dieter Zetsche in Detroit and Chrysler Chief Operating Officer Tom LaSorda in Warren, seemed obvious.
"It's us against the world," an emotional Warren Mayor Mark Steenbergh declared.
And this time, metro Detroit and Michigan won.
"Your jobs are not going anywhere," as Granholm put it, reiterating her desire to help Michigan retain its status as the capital of the automotive industry.
Chrysler invested $241 million to prepare Jefferson North for the new Grand Cherokee.
In Warren, it invested $100 million for the new Dakota and a new, still-unnamed Mitsubishi pickup that will soon be built there.
That's on top of $156 million invested in the plant in 2002 for the launch of the Dodge Ram and $35 million earlier this year to add a third shift. The Warren plant will basically run around the clock now, with three shifts five days a week and 900 new employees. The state has chipped in $900,000 in training funds for those new workers, Granholm announced at the event.
"We're going to keep filling this plant to run it three shifts," LaSorda said.
After the announcement, Chrysler executives also raised the possibility that another product might soon be built at Jefferson North, where there is capacity to build even more new unibody products. Frank Ewasyshyn, Chrysler's executive vice president of manufacturing, refused to say whether that might be the new Jeep Commander, a seven-seat luxury SUV slated for release next year. It will share its platform with the Grand Cherokee.
The Warren plant employs 4,800 workers; Jefferson North employs 2,800.
For the workers, the announcements seemed emotional, and hundreds of employees who attended the events clapped, chanted "Kwame," and hugged and high-fived each other. Some were more serious, though.
Debra Knight of Detroit, who has worked on a line at the Jefferson plant for 10 years, said the move brought added job security -- not just to her but to a community that badly needs it.
"There's so much competition now," she said.
What's more, the outlook at Chrysler was far less enthusiastic just a year ago.
The Auburn Hills-based automaker was reeling from a $1.1-billion loss it posted in the second quarter and promising to recover with a pipeline of new products that had some skeptical industry experts criticizing the automaker for sounding a bit like the musical "Annie," with promises of "Tomorrow, tomorrow."
Chrysler says tomorrow is here and that it is in the midst of its promised renaissance, thanks to its stable of new products launched this year: the Chrysler 300 sedan, Chrysler PT Cruiser convertible, Chrysler Crossfire Roadster, Dodge Magnum wagon, Jeep Wrangler Unlimited, Dodge Ram SRT-10 and new minivans. Additionally, the Dodge Durango SUV launched last year.
"We are coming back big time," Zetsche said.
After posting a $628-million profit in the second quarter this year, Zetsche is being besieged with new, desirable problems: How can the company build more Hemi engines? Should it add a third shift to the Brampton, Ontario, plant where it builds the hot Chrysler 300 sedan and Dodge Magnum wagon?
Both options are being seriously considered.
DaimlerChrysler's engine plant in Saltillo, Mexico, has the capacity to build about 460,000 engines a year. Most of those are the popular 5.7-liter, V8 Hemi engine, but the plant also makes some smaller 2.0-liter engines.
The plant is already running 20 hours a day, six days a week, but would need to add tooling equipment to its lines to expand production, Ewasyshyn said.
As it stands, Zetsche told reporters there are not enough Hemis to meet current demand. The company also plans to offer a Hemi in the new Dodge Charger, which is slated for release in the first half of next year.
"It's a great problem to have," he said.
The Chrysler 300C, with the Hemi, is a runaway hit, and the company needs to keep up with orders.
It is unclear whether the redesigned Dakota and Grand Cherokee will be received as well as the 300 and Magnum when they begin hitting showrooms. The truck launches come at a time when the price of gas is up, and a barrel of oil recently hovered near $50, although Zetsche and other auto executives have insisted that gas prices have had no impact on sales of their bigger, less fuel-efficient models.
The Grand Cherokee, which starts at $26,775, is a highly awaited replacement, and loyal Jeep owners are expected to flock to the redesigned version, which has a more refined interior and a more angular rear end. Jeep sales could use the boost; they are down over the past five years as competition in the SUV market has intensified. The brand recorded 554,466 sales in 1999 and 440,559 last year, according to Autodata Corp. of Woodcliff Lake, N.J.
Meanwhile, Chrysler is calling the new Dakota a mid-sized pickup, but industry experts such as Autodata view it as a compact pickup, and that segment has declined 32 percent over the past decade, from 1.1 million sales in 2003 to 731,299 last year.
That might be explained by the fact that products in that segment have been stale in recent years. Even several new pickups from General Motors Corp. don't seem to be reviving sales much.
Zetsche, though, said the Dakota will be the most attractive vehicle in the segment because it will offer the best overall package for less than $20,000. The four-door Dakota with a V8 starts at $19,995.