Project Dead

The business plan to build the Dodge M80 was not viable — forcing cancellation of the “Windsor Project” — a C$1.6 billion ($1.2 billion) assembly plant to be built in Windsor, Ont., Canada, Chrysler Group concludes.

But the innovative manufacturing concept that makes partners of suppliers, the union and government, still could work in the future with the right — higher-margin — product, says Chrysler President Dieter Zetsche.

And he says the exercise broke down some barriers when it comes to the Canadian government's willingness to chip in on new investment. Chrysler sought C$350 million ($256 million) in government incentives.

Canadian Auto Workers union President Buzz Hargrove charged the project that would have created 2,500 jobs died because of government foot-dragging, stretching the feasibility phase over an additional six months that included a U.S. war with Iraq, increased security and border issues, retail pricing pressures and a steady weakening of the dollar.

The only reason Chrysler isn't publicly blaming government, Hargrove says, is because it needs public help with future investments, including retooling of the Brampton, Ont., plant to make a new generation of rear-drive large cars.

Hargrove says he will continue to fight for a plant in Windsor — and a penalty system in Canada for companies that pull out of investments or close plants.

Now that the CAW is twice bitten — lack of money killed a plan to replace the Pillette Road fullsize van plant in Windsor three years ago — there is a credibility issue when it comes to bargaining on investment decisions. He expects it to affect Chrysler's negotiations this fall with the United Auto Workers union.

Zetsche says market conditions scuttled the program, citing a slow economy, pricing pressures and overcapacity. The small pickup market is especially price conscious, he says, adding Chrysler will now try to woo younger buyers through used car programs instead of the planned Millenium Program.