A UAW official in Toledo, Ohio, said Chrysler Corp. wants a new labor agreement with the assembly workers before it decides where to build a new plant to make the next-generation Jeep Cherokees and Wranglers.
'If they're going to invest up to $1 billion in a new plant, they're first going to want a labor agreement,' said Bruce Baumhower, president of UAW Local 12.
Chrysler says it may not announce its plant decision until the third quarter, Baumhower said.
Union negotiators were expected to meet with Chrysler representatives today, June 2, to begin local contract talks.
Chrysler had hoped to announce by the end of May where it would build the new plant. But the automaker says it has not determined the production volume or product mix of the new facility. Only then can Chrysler begin evaluating specific sites, said a Chrysler spokesman.
Chrysler told Local 12 that a new Jeep plant could be completed by the summer of 2000, and that production of the next-generation Cherokee could begin by that November, said Nick Vuich, Local 12 unit chairman at the Jeep plant. A Wrangler replacement is tentatively scheduled for 2002, he said.
The last local contract at the Toledo plant was reached in 1990. It was a seven-year agreement that helped convince Chrysler to keep the assembly plant open. The union agreed to flexible work rules to boost the plant's efficiency. Job classifications, for instance, dropped from 130 to 19. That contract will expire Sept. 14.
The Toledo plant makes the Jeep Cherokee and Wrangler sport-utilities.
Local 12 and Chrysler expect the replacement plant to be discussed at length during local negotiations.
Chrysler has said it cannot proceed with the next-generation Cherokee and Wrangler without a modern plant. Parts of the existing Jeep plant date back to 1910.
Labor productivity at the Toledo plant has been continually improving, said Ronald Harbour, president of Harbour and Associates Inc., a Troy, Mich., consulting firm.
'They're doing a pretty good job now on the quality of those vehicles,' Harbour said. He said he believes Chrysler could do the next-generation Cherokee at the existing plant.
The Toledo plant will again show an improvement in labor productivity, as measured by workers per vehicle, when The Harbour Report 1997 is issued June 11. The report is an annual analysis of manufacturing productivity in the North American automotive industry.
Chrysler has narrowed its plant search to three sites in Ohio, Vuich said. The preferred site by Chrysler and the union is at the existing Stickney Avenue plant, he said.
'We have 3,200 members who live in the city limits,' Vuich said.
Cherokees are built at the main plant on North Cove Boulevard along I-75. Wrangler bodies are made and painted at the main plant, then trucked about three miles to Stickney Avenue for final assembly.
Chrysler also is looking at two greenfield sites outside the city, 'but within a very reasonable driving distance from the existing plant,' Vuich said. Chrysler has said that it would like to locate the new plant within 50 miles of the existing plant so it can continue to use the current work force.
A new plant is a valuable bargaining chip, said David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation.
'It certainly will be a factor in negotiations,' Cole said.
The aging Jeep plant is 'well past its useful life,' he said. The union knows that without a new plant, it is vulnerable, he said.
While local contracts typically are for three years, 'we want a longer contract that would cover the move into the new plant,' Vuich said. The local may even agree to another seven-year contract, he said.
'The longer the better,' Vuich said.
Talks could get difficult when negotiating work rules for a plant that has not been built, he said.
For instance, the union and Chrysler must agree on the number of jobs in a new plant. A new plant would be more efficient than the existing plant and, therefore, is expected to require fewer workers.