Ram pickup plant to add third shift

First new jobs at Chrysler since last year's cuts

October 05, 2002|By BLOOMBERG NEWS

AUBURN HILLS, Mich. - DaimlerChrysler AG's Chrysler unit will spend $35 million and add 1,000 workers at a Ram pickup plant in Michigan, the first new jobs since the automaker said last year that it would cut 26,000 positions.

A third shift will be added to its Warren factory in mid-2003, enabling it to boost production 21 percent, or by 60,000 trucks annually, spokesman Mike Aberlich said. The plant now has 3,709 workers.

Increasing output of the Ram, Chrysler's best-selling vehicle, will let the third-largest U.S. automaker capitalize on the pickup's popularity as demand for other models stalls. Chrysler's U.S. sales have risen just 1 percent this year through September. The Ram's share of the large-pickup market rose 2.8 points to 18.6 percent during the same period, Autodata Corp. said.

"This just shows how important pickups are" to U.S. automakers, said Michael Robinet, vice president of global forecast services for auto-production forecaster CSM Worldwide. "They are going to defend this turf at any cost."

Chrysler makes an estimated $7,000 profit on each Ram pickup and the added production "could be a material earnings booster" starting next year, J.P. Morgan Securities Inc. said in a report.

Based on that estimate, 60,000 more Rams would add $420 million a year to Chrysler operating profit. The unit in this year's first half had operating profit of $224 million. Excluding one-time expenses, the profit would have been $902 million, the company said in July.

The U.S. shares of Stuttgart, Germany-based Daimler- Chrysler fell 86 cents to $33.42 on the New York Stock Exchange. They have declined 20 percent this year.

Chrysler sold 303,319 Ram pickups in the first nine months of this year, according to Autodata. The automaker builds the trucks in Warren and in Mexico. With the added shift, the Warren plant will be able to build 338,000 Ram and Dakota pickups annually, Chrysler said.

"The company is in the middle of a product resurgence," said Tom LaSorda, Chrysler's executive vice president of group manufacturing, at an event where the new shift was announced. "We're back."

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