AUBURN HILLS, MI – The Group and a handful of key suppliers hatched a unique partnership a few years ago to assemble and paint complete bodies for a vehicle – the Dodge M80 compact pickup – slated to be assembled at a greenfield plant in Windsor, Ont., Canada.
Although the vehicle program was canceled in spring 2003,remained committed to the manufacturing arrangement.
Today, it appears Chrysler is moving ahead with that philosophy as it prepares for a new assembly plant in Toledo, OH, on the site of its Stickney Avenue Jeep facility. The new plant is expected to open in 2006 and will build at least two models for Jeep.
Peter Rosenfeld, executive vice president-procurement and supply, says the Stickney Avenue facility will demonstrate a whole new approach to supplier relations.
“We have a very good idea of who the final supplier candidates are for that project,” Rosenfeld tells Ward’s.
Peter Rosenfeld says Chrysler wants to “forge new ground” with supplier park at new Jeep plant.
This summer, Chrysler expects to have signed contracts with suppliers to handle key areas of vehicle manufacturing, namely the paint shop and body shop, Rosenfeld says. He refers to the arrangement as a “supplier park,” where suppliers would own more assets than at a traditional OEM-run manufacturing operation.
In addition, Chrysler plans to use a “rolling chassis,” in which one supplier would integrate brake, wheel, chassis and exhaust components. The entire underbody then would be delivered to the vehicle assembly plant, where it would be mated with the body.
Frame producerCorp., which is based in Toledo, supplied the rolling chassis beginning in 1998 for the Dodge Dakota, produced in Brazil. But Chrysler has since stopped producing Dakotas in Brazil. Rosenfeld would not say whether Dana will supply the rolling chassis for the upcoming Jeep.
Many issues remain unsettled as Chrysler attempts to craft a new supplier philosophy for Stickney Avenue.
“It’s reasonable to say that for Toledo we are clearly pursuing a new way of doing things,” Rosenfeld says. “We are clearly looking at paradigm shifts in the way we have relations with suppliers here in North America, particularly in the U.S.”
Among the outstanding issues: Who owns the components on a rolling chassis, and who will manage the unwieldy logistics chain for those components? Will employees in the paint shop and body shop work for the supplier or for Chrysler?
The labor issue is touchy, but Rosenfeld says last year’s contract negotiations with the United Auto Workers union included talks about the supplier arrangement at Stickney.
Had the Windsor project gone forward, the workers would have been unionized employees of the suppliers.
Beyond the paint and body shop and rolling chassis, Rosenfeld says it is not clear whether other suppliers will be involved.
“It is well known we are pursuing a modular strategy in some arenas,” Rosenfeld says. “Whether those modules end up on-site or not, it’s too soon to tell,” he says.
It also is not entirely clear whether suppliers in this new relationship will be located under the same roof as vehicle assembly, or whether there will be an adjacent complex. “Whether there will be other suppliers within those confines is still under review,” Rosenfeld says. “We’re land-locked, so it’s a question of space.”
He is confident the new relationship will “forge new ground here” and will demonstrate Chrysler’s significant commitment to the Toledo area at a time when low-cost labor overseas appears so alluring.
“I think Chrysler is showing that it is, wherever possible, making a commitment to North America and to the U.S. specifically,” he says.
He refers to Chrysler’s recent sale of component plants in Huntsville, AL, (to Siemens VDO Automotive); Dayton, OH (to (See related story: Buying OEM Component Plants No Picnic)America Inc.); and New Castle, IN (to Corp.) as clearly preferred to shutting down the plants outright.
“Obviously, there were alternatives to all of that,” Rosenfeld says. “So wherever we can do it and make it economically viable, we will do the best we can.”
– with Kevin Kelly