Chrysler to build plant in Mexico

DaimlerChrysler AG's Chrysler Group will build a $570 million V-6 engine plant in Mexico as part of its plan to improve fuel-efficiency of its truck-heavy lineup, the automaker announced Friday.

The plant starts production in 2009, building the automaker's new family of V-6 engines dubbed "Phoenix" engines that offer better gas mileage. The factory -- to be located in Derramadero near the Saltillo-based Dodge Ram plant -- will assemble 440,000 units annually and employ 485 workers.

The factory will be the second site where the more fuel-efficient engines will be built. Chrysler broke ground last month on a $730 million factory in Trenton where Phoenix engines also will be produced.

The Saltillo plant is part of Chrysler's push to install more fuel-efficient parts into its vehicles. The Auburn Hills automaker is investing $3 billion into the plan that also calls for new transmissions and axles.

Frank Ewasyshyn, Chrysler's vice president of manufacturing, said in a statement that the recent announcement commemorates an important milestone for the automaker. "We're investing in the international future of our company," Ewasyshyn said.

The fuel-efficient power trains will be installed in 20 new vehicles the automaker plans to launch in the next three years.

"They have an established manufacturing operation down there, and geographically they've got a place in Michigan and a place on the opposite end of the country," said Paul Lacy, a power train analyst at Global Insight Inc. "So the distribution network will probably benefit them as well. Logistically it makes sense."

Some of the Phoenix engines may have a fuel-saving direct injection feature, Lacy said.

"And it will be all aluminum block, so it's lighter, which reduces the overall vehicle weight," he said.