Chrysler Gives Delaware Plant Reprieve With Intrepid Production
DETROIT (AP) _ Chrysler Corp. gave a reprieve to its Newark, Del., assembly plant Wednesday, assigning it overflow production of the Dodge Intrepid midsize car.
The plant, which has about 3,700 workers, was threatened with closure after its current lineup of cars ends in 1994.
Chrysler will spend $137 million for a 50,000 square-foot expansion and retooling at the Newark factory, which will supplement Intrepid production at a plant in Ontario. The move, which will still lead to some layoffs, was regarded as a cost-efficient way for the automaker to make the most of its facilities.
Chrysler will integrate the Intrepid, one of its widely acclaimed LH cars, into Newark’s production of the Dodge Spirit, Plymouth Acclaim and Chrysler LeBaron Sedan, Coupe and Convertible, spokesman Chris Hosford said.
″The economics of this are quite compelling,″ said Joseph Phillippi, an auto industry analyst with Lehman Brothers Inc.
He said Chrysler could recoup most of its investment in the first year of Intrepid production, figuring each one built has a gross variable profit margin of $5,000.
Newark was selected as the second site for Intrepid production because it has the ability to add as many as 90,000 cars a year.
″You’re in effect building a base for potentially far more than just 90,000 units,″ he said. ″As the (Acclaim, Shadow and LeBaron) continue to drop off in demand, this will obviously take the place of that.″
Before winning the Intrepid assignment the Delaware factory had been passed over for Chrysler’s new 1995 compact car, which will built at a Sterling Heights, Mich. assembly plant.
Chrysler had considered adding a shift at Bramalea, Ontario, where it began building its widely acclaimed LH midsize cars in June. It decided to use the Delaware plant because a third shift in Ontario would have increased production only by a maximum 66,000 vehicles.
Adding a third shift in Bramalea also would have required hiring and training new Canadian workers.
″The company told us today the main reason we were getting the Intrepid was because of the quality work force and the quality work we were doing,″ said Richard McDonaugh, president of UAW Local 1183 at the Newark assembly plant.
Assigning the Intrepid and possibly the Chrysler Concorde and Eagle Vision production to Newark also prevents most of the work force from being laid off after 1994. Under the current UAW-Chrysler contract, which expires next summer, workers laid off for anything other than slow sales receive their regular pay until recalled.
The Newark plant, which currently builds 62 to 68 cars an hour on two shifts, will move more slowly with the Intrepid in its lineup.
The speed of production will drop to about 50 cars an hour, requiring an undetermined number of layoffs from the work force of 3,700, Hosford said. The plant also will shut down for four weeks next fall for retooling.
When a second shift at Bramalea is added in December, Chrysler will be able to build 300,000 Intrepids, Concordes and Visions a year at Bramalea. Production of a fourth LH car - the redesigned Chrysler New Yorker - will begin in Bramalea in February.