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NINETY EIGHT REGENCY

New Chrysler jobs to build Cherokee could signal turnaround

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New Chrysler jobs to build Cherokee could signal turnaround

Most of the 1,100 new hires to earn lower wages than current workers

Alisa Priddle / The Detroit News

Detroit -- The addition of a second shift and almost 1,100 new workers at Chrysler Group LLC's Jefferson North Jeep assembly plant this summer could signal a comeback for the automaker, Detroit's Big Three and the industry.

"We will see a lot more of that," said Dave Cole, chairman of the Center for Automotive Research in Ann Arbor.

Cole forecasts the auto industry, including suppliers, will need to hire about 15,000 new workers this year in the United States and about 100,000 a year after that as sales rebound.

The Chrysler announcement marks the first major hiring since the United Auto Workers union agreed to lower entry-level wages for new employees.

Chrysler Group LLC CEO Sergio Marchionne said the second shift will be added July 19, and most of the 1,080 jobs will be new hires.

Marchionne said he doesn't know when hiring will begin, but company officials said the automaker is not accepting new applications because it has enough applications on file to fill the shift.

All the additional workers will be considered new hires because Chrysler does not have any laid-off workers to recall, said General Holiefield, the UAW vice president who heads the Chrysler department.

Marchionne made the surprise announcement Friday at an event marking the start of production of the all-new 2011 Jeep Grand Cherokee that will begin arriving in showrooms next month. It is Chrysler's first new product since the automaker emerged from bankruptcy and formed a partnership with Fiat SpA.

"We are anticipating that there will be strong customer demand," Marchionne said, "so we decided it was prudent to add a second shift of production."

Dealer orders are about a third higher than anticipated in the United States for the sport utility vehicle, which will be exported worldwide, said Mike Manley, who oversees the Jeep brand.

Officials would not say how many Grand Cherokees they expect to sell or give the capacity of the revamped Jefferson North plant. Chrysler has invested $700 million in the SUV and the plant, adding a body shop as part of the facility's makeover.

U.S. Grand Cherokee sales were about 50,300 in 2009, down 32 percent from the year before and a far cry from more than 300,000, its apex, in 1999.

The Detroit plant built 60,600 vehicles last year, according to WardsAuto.com, down from more than 186,000 two years earlier and almost 300,000 in 2000 when the plant hummed on three shifts.

The additional workers will augment the roughly 1,700 workers on the plant's current single shift. But while the existing workers make $28 an hour, new hires, under the terms of the UAW collective bargaining agreement reached in 2007, receive $14 to $16 an hour and less-generous benefits than veteran workers.

"It's a living wage," Holiefield said. "They can take care of their families."

Cole said having workers of varying wages working shoulder to shoulder should not present a problem because it was a labor-negotiated agreement.

And there is precedence elsewhere in the industry. Many suppliers have adopted a two-tier wage, including parts plants owned by automakers.

Chrysler's Jeep plant in Toledo has Chrysler workers doing final vehicle assembly beside the employees of suppliers who run the rest of the plant.

New hires also have the carrot of knowing that they can move into a higher-wage position if enough workers retire, Cole said.

There is a 20 percent cap on the percentage of new hires an automaker is allowed.

Chrysler has hired about 400 new workers to date at the lower wage in a work force of 22,000, Holiefield said. The addition of 1,100 will not come close to reaching the cap.

Ford Motor Co. has hired no assembly workers under the new wage structure.

General Motors Co. President Mark Reuss said in April the automaker may soon start hiring lower-paid hourly workers to boost production of popular new vehicles. Cole said GM first must finish recalling about 5,000 laid-off workers.

To start the event Friday, Marchionne drove a new Grand Cherokee to a makeshift stage, with Gov. Jennifer Granholm riding shotgun.

The CEO, who got a standing ovation from workers even before he made the second-shift announcement, said he would love to be able to announce a third shift at some point. But demand for the new Jeep and a seven-passenger Dodge to be launched later in the year will dictate how much capacity is needed.

"The best work force is here in the Motor City," Granholm said in praising Chrysler's decision to build the flagship Jeep in Detroit.

"It's not made in some Southern cornfield plant."

Added U.S. Sen. Debbie Stabenow, D-Lansing: "It is about an investment in a great city and tells the rest of the world America is going to make things in America.

"Chrysler is back."

From The Detroit News: http://detnews.com/article/20100522/AUTO01/5220348/1148/New-Chrysler-jobs-to-build-Cherokee-could-signal-turnaround#ixzz0oqm6KSYU

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