DaimlerChrysler AG's Chrysler Group, forging ahead with its turnaround plan, is expected to announce Wednesday that it will build a new engine plant in Trenton to produce the automaker's next generation of V-6 engines, code-named Phoenix, according to sources familiar with the plan.
The announcement comes after the Michigan Economic Growth Authority approved tax credits today worth more than $11.2 million over nine years to pave the way for the new factory.
Chrysler is expected to announce the Trenton project along with plans for a new axle factory in Marysville during a press conference Wednesday at the company's Auburn Hills headquarters. The Detroit News first reported Chrysler's axle factory plans today. "We applaud the state's move," Chrysler spokesman Dave Elshoff said of the tax credits. "Incentives of this nature are an important part of the business-case building process to move forward with any investment."
Elshoff would not confirm that a new engine plant will be built at the Trenton site. The automaker has been looking at several sites in and out of Michigan for a factory to build the new V-6 engines, which would equip Chrysler, Dodge and Jeep and Mercedes vehicles by 2010.
The axle and engine plant projects are part of Chrysler's plan to invest $3 billion in engines, transmissions and other powertrain components to improve fuel economy as part of its recovery plan. The automaker lost $1.5 billion last year and is cutting jobs, closing one factory and reducing production at several others to restore profits.
Trenton Mayor Gerry Brown said the city is offering Chrysler an incentive package worth more than $62 million to build a new plant there.
"We made it very hard for them to walk away," he said in an interview Tuesday. Brown will be at Wednesday's announcement, along with Gov. Jennifer Granholm and United Auto Workers President Ron Gettelfinger.
The new Trenton plant would be built adjacent to the existing engine factory. It would start production in April 2009 for the 2010 model year, according to a briefing of the project prepared for the Michigan Economic Growth Authority.
The tax credits would keep 485 jobs in Trenton with an average weekly wage of $1,403, the briefing said. In exchange for the tax break, Chrysler would invest at least $500 million in at least two other Michigan facilities that were not identified, but one likely is the new axle plant.
The new engine plant is not expected to replace the existing Trenton engine plant in the next few years, but that could happen eventually.
The existing Trenton engine plant sits on 136 acres near Van Horn Road and employs 1,630. Several V-6 engines are built there that are used in Chrysler and Dodge minivans, the Chrysler Pacifica sport wagon and the Jeep Wrangler and Dodge Nitro sport utility vehicles.
Workers at the plant, hoping to bring the new factory to Trenton, ratified work rule changes last year to reduce costs and make the factory more flexible, including scaling the work week back to four 10-hour days, limiting overtime and reducing the number of job classifications to two, allowing workers to do more than one task.