Jun 11, 2009


Tony Van Alphen
Business Reporter

The Grand Caravans, 300s and Chargers could be rolling off the assembly lines at Chrysler Canada plants within three weeks as the company's parent pulls away from bankruptcy protection with a new partner following a two-month shutdown.

Although Chrysler would not confirm dates, the Canadian Auto Workers union said yesterday that company officials have suggested privately they want to reopen the minivan plant in Windsor, a car operation in Brampton and an engine casting factory in Etobicoke by June 29.

"There's no official notification yet, but we are optimistic the plants will be up and running by the end of the month," said Jerry Dias, a senior CAW official. "The company hopes to start by then."

About 8,700 workers at Chrysler Canada Inc.'s operations have been off the job since the end of April, when the parent company gained court protection from creditors in the United States. Thousands of other workers at scores of parts makers that supply the assembly plants have also been idled.

Chrysler had wanted to build autos during a 30- to 60-day bankruptcy period but uncertainty over the process and payments prompted some edgy suppliers to stop deliveries. It disrupted operations here and in the U.S., where about 27,000 more workers are on layoff.

Chrysler spokespersons said yesterday they did not know when plants in Canada or the U.S. would reopen.

Dias, assistant to CAW president Ken Lewenza, said Chrysler wants to start building vehicles as soon as possible to improve consumer confidence.

Chrysler sales crashed in Canada and the U.S. last month partly because of uncertainty over the company's future, according to industry watchers.

Dias said Chrysler has already recalled some staff to ease the transition to work practices set by Italian automaker Fiat SpA, Chrysler's new owner.

"We've already incorporated a lot of the lean manufacturing techniques so it shouldn't be too difficult," he added.

Parent company Chrysler LLC emerged from court protection yesterday after Fiat took ownership of most of its assets, including the Canadian operations.

Chrysler announced Fiat chief executive officer Sergio Marchionne, who grew up in Toronto, would also head the company.

Marchionne spoke to senior staff at Chrysler's headquarters in Auburn Hills, Mich., about the company's push to implement Fiat's fuel-efficient technologies in smaller cars in North America and develop a new corporate culture.

"He told us bureaucracy doesn't build cars," said Lewenza who heard Marchionne's speech. "He really emphasized the need for fewer managers and the need for everyone to help change the culture."

The company announced several management changes – including the appointment of president Jim Press as deputy chief executive – and individual presidents for the Chrysler, Dodge and Jeep brands. Reid Bigland, Chrysler Canada's CEO, will stay in his current post.

Chrysler LLC CEO Bob Nardelli informed staff of his departure while Stephen Landry, executive vice-president of North American sales and a former CEO of Chrysler Canada, confirmed his retirement.

Dias said Chrysler has already recalled some staff to ease the transition to work practices set by Italian automaker Fiat SpA, Chrysler's new owner.

Chrysler Group LLC, the revamped U.S. automaker led by Fiat SpA, will use technology from the Italian company in six of its vehicles and help build six Fiat- brand cars, research firm IHS Global Insight Inc. said.

Fiat platforms will be used in redesigned versions of Chrysler’s Dodge Caliber, and Journey and Jeep Liberty sport- utility vehicles, IHS said in a report today. IHS predicts the Chrysler and Fiat models will be built during the next three years at plants in the U.S., Mexico and Canada.

Chrysler Group has access to fuel-efficient autos and global markets through its alliance with Fiat. Sergio Marchionne, the chief executive officer of both companies, said yesterday that Chrysler plants would begin receiving Fiat tooling and technology over the next several months. A Chrysler spokesman declined to confirm IHS’s projections.

“It’s way too early to speculate on this,” said Rick Deneau of Chrysler. “We are working these plans out now.”

The platforms consist of almost all components used in a car that the average person can’t see, said John Wolkonowicz, an analyst with Lexington, Massachusetts-based IHS who co-wrote the report. They include steering, electrical systems, suspensions and exhaust systems.

“I think it’s going to be very difficult,” said Wolkonowicz. “The Chrysler, Dodge and Jeep stuff still has to have a style very different from the Fiat stuff.”

The platforms would replace Chrysler’s existing components for various models of Chrysler’s mid-sized cars, Wolkonowicz said. The study also gives production plan estimates for three new Chrysler vehicles, five Alfa Romeo luxury cars and the assembly of the Fiat 500 subcompact car.

Chrysler Plants

IHS predicts that most of the Auburn Hills, Michigan-based Chrysler vehicles will be built at plants in Belvidere, Illinois; Toluca, Mexico; and Toledo, Ohio. The Fiat models will be produced at plants in Detroit, Toluca and Brampton, Ontario.

The Fiat platforms will also be used in the Jeep Panda, the Dodge Hornet and the replacement for the Chrysler Sebring, the IHS report said.

Documents from bankruptcy court show that Chrysler plans to build at least one car in the U.S. based on an Alfa Romeo platform.

Chrysler says it will double the $4,500 government incentive for people to trade in their old gas guzzlers for new vehicles under the "cash for clunkers" program.

The automaker announced Wednesday that it will offer up to $4,500 cash or zero percent financing for six years on most of its 2009 Chrysler, Dodge or Jeep models. The incentive begins Thursday and lasts until Aug. 31.

Chrysler says in a statement that buyers are eligible even if they don't qualify for the clunkers program.

The government's "cash for clunkers" program is expected to begin later this month. It gives owners of inefficient, older vehicles up to a $4,500 incentive to trade them in and send them to the scrap heap in exchange for more efficient models.

Basically, here’s how the program works for new-car purchases (different criteria apply to trucks):

1. The car you’re trading in must have been registered and in use for at least a year (this provision prevents people from buying an old beater from a junkyard and trading it in for a new car).

2. The trade-in vehicle must have a combined city and highway fuel-economy rating of 18 mpg or less.

3. The new car you purchase must be priced at $45,000 or less.

4. The new car must have a federal fuel-economy rating that is at least 4 mpg better than the old car you’re trading in to qualify for a $3,500 voucher, or be rated at least 10 mpg better to get the maximum payment of $4,500.

We've all been eagerly awaiting the change at Chrysler that's certain to come with Fiat taking the helm, and with a number of Alfa Romeo and Fiat models already in the pipeline, the company is now talking brand strategy. And that's what has Chrysler's Peter Fong talking about surpassing Lincoln and Cadillac.

Pushing the Chrysler brands farther apart, with larger price and feature gaps to distinguish the Dodge from Chrysler means Dodge will be eying sportier traits, while Chrysler vehicles will move further upscale in the luxury arena. But Chrysler isn't aiming just to take on Cadillac and Lincoln--it wants to beat them.

That means pushing the Chrysler brand, "a notch above Lincoln, a notch above Cadillac," says Peter Fong, president and CEO of the brand. That will necessitate a big move up-market as Cadillac is already ahead and is progressing quickly to improve its own products and luxury status with cars like the SRX, CTS sedan, coupe and wagon and the upcoming XTS flagship.

How, exactly, Chrysler plans to do that has not been revealed. The full product plan to back up this new strategy is scheduled for release in November. Though the 200C electric vehicle revealed at this year's Detroit Auto Show isn't headed to production, it is a preview of the upcoming design language for the brand revival, so expect any new products to share some hints borrowed from that vehicle, including possible Chrysler-branded Alfa and Fiat variants.

Dodge will move further from Chrysler by focusing on offering sporty vehicles, emphasizing performance while balancing that against the new fuel economy and emissions mandates. Jeep will remain largely unchanged, though its recent focus on the more car-like smaller segments with vehicles like the Compass and Patriot will grow.