UPDATE 1-Chrysler hiring 1,100 workers at Detroit plant


* Chrysler to hire 1,100 new workers at Jeep plant

* Strong dealer orders for Grand Cherokee prompted move

* Second shift to start in mid-July at Detroit plant

By Bernie Woodall

DETROIT, May 21 (Reuters) - Chrysler Group LLC said on Friday it would hire almost 1,100 new workers at the Detroit plant that was retooled for production of its new Grand Cherokee, a Jeep model that the automaker is counting on to claw back market share.

The Grand Cherokee, which was in development before Chrysler went into a U.S. government-funded bankruptcy last year, is the only all-new vehicle the No. 3 U.S. automaker will have in showrooms between now and the fourth quarter.

Now operating under the control of Fiat SpA , Chrysler executives have presented the new Jeep as the first test of the reorganized company's newfound dedication to quality and streamlined manufacturing.

"The world will be watching to see if we are true to our word," Chrysler Chief Executive Sergio Marchionne said at an event at the automaker's Jefferson North Assembly plant to mark the start of production of the new vehicle.

Since late 2008, Chrysler has not had a new car or truck in showrooms, an unusually long gap that has hurt its sales and damaged its reputation.

Former Chrysler owners Daimler AG and Cerberus Capital Management [CBS.UL] both slowed investment in new vehicles and improvements as the downturn in U.S. auto sales took hold.

Mike Manley, the executive who heads the Jeep brand, said the automaker expected that the new Grand Cherokee would win back market share against better-selling rival models like the Honda Pilot and the Ford Escape.

"When you come toward the end of any product life cycle, you start to lose market share. We intend to get that back," Manley told reporters.

Chrysler has not given a sales projection for the fourth-generation Grand Cherokee, which features traditional SUV styling, but is built on a car platform to give it improved handling and fuel economy.

Manley said that initial dealer orders for the Grand Cherokee were between 30 percent and 40 percent higher than Chrysler had anticipated, one of the reasons the automaker opted to hire workers for a second production shift.

"We are very confident that we can sell the vehicle," he said. "We are thinking that this vehicle's (sales) volumes will be up significantly from the prior model."

Chrysler and the United Auto Workers union said the new workers would be hired starting at the $14-per-hour wage rates that U.S. automakers negotiated in order to slash labor costs.

That's half the pay that veteran UAW workers earn.

"This gets us back into the ball game. It's going to help us compete with our rivals," said UAW Vice President General Holiefield, who handles relations with Chrysler for the union.

Chrysler sales in the first four months of this year were up nearly 2 percent, lagging a rebound in the broader market. Its U.S. market share has fallen to 9.4 percent from almost 11 percent.

The first-generation Grand Cherokee, which was released in 1992, was the first Chrysler-badged all-new Jeep product. The vehicle rode the SUV boom in the 1990s and sales peaked at just over 300,000 in 1999. In 2009, Chrysler sold just over 50,000.

The new model, which is based on a Mercedes-derived platform, will be priced starting at $30,215, almost $500 cheaper than the older model. (Reporting by Bernie Woodall. Editing by Robert MacMillan)



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