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Global Engine Manufacturing Alliance Plant

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Associated Press
Joint Venture Plant Begins Making Engines
10.04.2005, 10:28 AM

DaimlerChrysler AG, Hyundai Motor Co. and Mitsubishi Corp. began production Monday at a new plant that will supply more fuel efficient engines for nearly two dozen vehicles worldwide.

The plant is part of the Global Engine Manufacturing Alliance, a joint venture between the three companies. The plant and a sister plant in Dundee, which will be completed in 13 months, will each have the capacity to build 420,000 engines annually, DaimlerChrysler said. The two plants are among a group of five GEMA plants that will eventually produce 1.8 million engines annually. Two other plants are already producting engines in South Korea and Japan.

The Dundee plants will employ 530 people, according to DaimlerChrysler, which is based in Germany and in Michigan.

The four-cylinder GEMA engines - in 1.8, 2- and 2.4-liter configurations - are designed to deliver 5 percent better fuel efficiency than those they are replacing, said GEMA President Bruce Coventry.

South Korea's Hyundai had the lead design responsibility for the base engine, but the Chrysler Group and Japan's Mitsubishi made significant contributions to the design. So far, the engines are only being built for vehicles from those three companies.

DaimlerChrysler estimates the partnership will save the company $100 million each year. The company has been making four-cylinder engines for the Chrysler Group at plants in Michigan and Mexico. Now, the Michigan plant will focus on six-cylinder engines and the Mexican plant will focus on Hemi engines, Chrysler Group spokesman David Elshoff said.

The companies agreed to collaborate on the engines in September 2001. Although they didn't release a total amount that has been invested in the project, the partnership has spent $803 million on the plant in Dundee, including $600 million for the facilities and $203 million for product development, Elshoff said.

"GEMA represents a whole new business model for engine development, one that leverages the combined capabilities of its partners and economies of scale in order to generate breakthrough improvement," Chrysler Group President and CEO Tom LaSorda said.

The plant has unique work rules. Workers are required to have at least five years' experience, specialized training or a community college degree, said Mark Dunning, the facility's senior human relations manager.

Groups of six to eight employees will work together in teams, Dunning said. The employees also will work four 10-hour shifts per week.

"As market pressures change, organizations need to adapt and be flexible enough to meet new demands," said Nate Gooden, vice president of the United Auto Workers' DaimlerChrysler division.

LaSorda said GEMA will produce conventional gasoline engines. The power plants could be adapted for hybrid technology, but Chrysler anticipates using larger engines in its hybrid vehicles, he said. DaimlerChrysler, General Motors Corp. and BMW Group are jointly developing hybrid engines.


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Also Detroit News article:

New Dundee engine plant breaks manufacturing mold

DCX, Mitsubishi, Hyundai are partners in venture

By Christine Tierney / The Detroit News

DUNDEE-- DaimlerChrysler AG's Chrysler Group is weighing adding a third production shift to its Belvidere, Ill., plant, which will build the Dodge Caliber, a new small car replacing the Neon that will be fitted with four-cylinder engines built here.

Sales of "small cars are picking up, and so are midsize cars with small engines," Chrysler Group CEO Tom LaSorda told reporters at the formal opening of the Global Engine Manufacturing Alliance plant, part of a joint venture owned by DaimlerChrysler, Mitsubishi Motors and Hyundai Motor Co. "Our planning is to look at three shifts at Belvidere."

In addition to the new Caliber, the Belvidere factory is expected to produce small Jeep vehicles that have only been shown as concept vehicles.

Chrysler will equip those vehicles with the engines built at this new $370 million plant.

The engines, developed jointly by DaimlerChrysler, Hyundai and Mitsubishi, will be assembled in five plants worldwide, including two in South Korea, one in Japan and a second factory under construction at the 275-acre Dundee site scheduled to begin production next fall.

The first Dundee plant, which began producing engines last month, has the capacity to produce 420,000 units a year -- and Chrysler will take all the engines produced until 2008, when Mitsubishi expects to take some engines. The second Dundee plant will initially have capacity to build 200,000 engines and further expansion will hinge on market demand, LaSorda said. Total investment is expected to reach $800 million.

Already, the first Dundee engine plant's output will result in lower production at the automaker's engine plants in Saltillo, Mexico, and Trenton. LaSorda said workers at some of those plants would be idled, though some may be offered work at other, busier Chrysler plants. He did not say how many workers might be affected.

The Dundee plant will ultimately employ around 550 -- 250 hourly workers, 150 salaried workers and 150 employees from parts suppliers. The plant is unionized, but the United Auto Workers agreed to an innovative labor accord that sets only one job classification, allowing workers to do a variety of tasks.

"Anyone can do anything, anytime, anywhere," said Bruce Coventry, president of the Global Engine Manufacturing Alliance (GEMA).

"GEMA is just the beginning of what the UAW is going to do," said UAW negotiator Nate Gooden, who also sits on DaimlerChrysler's supervisory board. "We have created good jobs for this community."

The workers at Dundee, all skilled, earn $30 an hour on average. "The wage is higher than the average wage in a UAW plant," with skilled and unskilled workers, Coventry said. "The difference is, we're doing it with 25 to 30 percent of the manpower."

Production is organized around 10-hour shifts, which results in longer but fewer working days for workers -- they receive 49 more days off each year -- and the plant operates longer, which helps to lower production costs. Chrysler expects to save more than $100 million annually on the cost of four-cylinder engines from the plant, which it believes is one of the most productive in North America.

"It was very clearly set as a 'beat-Toyota' project from a productivity standpoint," said Coventry. Plant managers benchmarked Toyota Motor Corp.'s highly efficient engine plant in Buffalo, W.V.

"This is an example of exactly where manufacturing ought to be going," Gov. Jennifer Granholm said after touring the plant. "As collaboration occurs, the entire industry benefits," she said, referring to the three-way auto partnership.

Granholm is trying to attract international investment to Michigan offset an erosion of the state's manufacturing sector. Last year, Ontario overtook Michigan in vehicle output and the growth in U.S. auto production is taking place in the Sunbelt states.

In the past three and a half years, Detroit's automakers have invested nearly $9 billion in Michigan. In addition, Granholm has secured investments from foreign-based automakers, such as Toyota's expansion of its technical center, by offering tax credits and training grants. Hyundai has just opened the Hyundia-Kia America Technical Center, and Nissan Motor Co. has expanded its technical center in Farmington Hills.

The engine venture is a remnant of DaimlerChrysler's Asian expansion strategy, which entailed taking equity stakes in Hyundai and Mitsubishi. The plan fizzled in 2004 after DaimlerChrysler's board refused to help bail out ailing Mitsubishi Motors. Soon afterwards, Hyundai distanced itself from DaimlerChrysler, which sold its stake in the South Korean automaker.

Because of its financial woes, Mitsubishi has postponed taking engines from the Dundee venture.

Hyundai is not purchasing engines from the Dundee plants, relying on venture plants in Asan and Hwasung in South Korea. A fourth plant was built in Shiga, Japan. Overall, the alliance expects to build 1.8 million engines annually.

You can reach Christine Tierney at (313) 222-1463 or


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