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Chrysler Buying Back Plant Tossed in Chapter 11

But no clear plans for Sterling Heights facility after 2012.

by on Feb.19, 2010

The plant builds sedans, including Chrysler Sebring. Sales are down since its 2007 debut.

As part of its bankruptcy, last year, Chrysler abandoned seven factories; but now the automaker wants one of those facilities back, and plans to buy back the assembly line, in Sterling Heights, Michigan.

The move, if approved by a U.S. bankruptcy court judge, next month, would give the automaker a place to produce midsize sedans like the Chrysler Sebring and Dodge Avenger – both of which are due for “significan” redesigns as part of Chrysler’s upcoming product blitz.

The updated models are scheduled to remain in production through the 2012 model-year.  The following year, the U.S. maker switches to an all-new platform developed by its Italian partner, Fiat.

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Chrysler will not say whether Sterling Heights would pick up any new products based on that new platform but going forward, the company intends to increase the flexibility of its plants, according to CEO Sergio Marchionne.  That would make it possible for the Sterling Heights plant to produce any number of future Chrysler offerings, indeed, numerous platforms simultaneously.  

The factory has had a troubled history.  It was originally built by Volkswagen and was meant to supplement the German maker’s other U.S. assembly plant, in Westmoreland, Pennsylvania.  But as the impact of the twin oil shocks of the 1970s faded, VW suffered a severe slump in sales.  It never wound up building cars in Michigan and then closed the Westmoreland factory.  Chrysler took over the Sterling Heights assembly plant in 1983.

But in recent years, it saw demand for its products slacken, especially after the latest update of the Sebring received, at best, lackluster reviews.  Sterling Heights was originally slated to build its last car by the end of this year, and was to have been one of seven factories abandoned under last year’s court-guided restructuring.

All became part of what is commonly called “old” Chrysler, but is officially Old Carco LLC.  That enterprise’s sole purpose is to dispose of unwanted Chrysler assets.  Funds generated by such sales could help recoup at least some of the money various creditors and other stakeholders lost as a result of the Chrysler bankruptcy.

Two other facilities have found buyers.  The Twinsburg Industrial Park is seeking court approval to purchase Chrysler’s old stamping facility, in Twinsburg, Ohio, for $27.5 million.  And the University of Delaware bought the Chrysler assembly line in Newark, Delaware for $24.2 million, last November.

Similar steps are being taken to dispose of old plants and other assets abandoned as part of the General Motors bankruptcy.  The most notable development there involved the sale of another Delaware plant to Fisker Automotive.  The start-up company, which is based in suburban Los Angeles, plans to use that factory to produce a new line of plug-in electric vehicles codenamed Project Nina.

Chrysler’s $20 million offer for the Sterling Heights plant must yet be approved by U.S. Bankruptcy Judge Arthur Gonzalez, who will hold a hearing on the proposal on March 11.  The 3 million square-foot facility currently employs about 1,200 union workers.

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One Response to “Chrysler Buying Back Plant Tossed in Chapter 11”

  1. Tim Sweet says:

    Wonder what Fiat is going to build there….The new Dodge Dart????

    Tim Sweet
    Average Guy’s Car Restoration, Mods and Racing
    http://www.timsweet.wordpress.com