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Chrysler Won’t Kill Plant, Marchionne Tells Obama

Fiat CEO defends controversial bailout, says it created jobs.

by on Jul.30, 2010

Jefferson North, one of the few inner city plants remaining, is in a strongly Democratic district.

More than 1,500 UAW-represented employees at Chrysler Group’s Jefferson North Assembly Plant in Detroit welcomed U.S. President Obama to the home of the all-new 2011 Jeep Grand Cherokee today.

The President visited the plant a little more than a year after Chrysler emerged from bankruptcy because of billions of dollars in taxpayer support as part of his mid-term election year push to sell Democratic industrial policies to angry and skeptical voters.

Turin-based Fiat with the help of taxpayer money gained control of Chrysler in the process. Sergio Marchionne is now CEO of both groups.

During the visit, Marchionne announced that the nearby suburban Sterling Heights Assembly Plant (SHAP) would not be closed, as he originally said as part of Chrysler’s post-bankruptcy business plan, but rather it would stay open beyond 2012. A second shift of about 900 workers will also be added in early 2011. To support that operation, suppliers will add nearly 500 jobs it’s estimated.

“After a careful review of all of our manufacturing operations, it became evident that more production capacity was needed and it made good business sense to extend the life of SHAP,” Marchionne said to a crowd of wildly cheering inner city workers.

Marchionne also said that Chrysler also expects its European and South American sales to double between 2010 and 2011, to nearly 200,000 sales. This increase in sales is largely attributable to Chrysler’s ability to use Fiat’s international distribution networks, particularly in those markets.

“We were honored to have the President come to Jefferson North today,” said Marchionne. “It was because of the courageousness of his decision that Chrysler has been able to survive, and in fact thrive, a little more than a year after bankruptcy.”

Since June 2009, Chrysler Group has reported an operating profit of $143 million for the first quarter of 2010, and has added a second shift of production – or nearly 1,100 jobs – at Jefferson.

A public sale of stock will likely occur next year. If successful, taxpayers could recoup billions of the $12 billion advanced. Fiat has also asked for an additional $10 billion in loans to develop advanced technology vehicles.

Right now the U.S. Treasury owns 10% of Chrysler, Fiat 20% and the United Autoworkers Union health care plans has 50%.

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