Jeep's Toledo trade-off: Lower costs, less control

TOLEDO, Ohio -- If ever there was an all-American product, it is the storied Jeep Wrangler. But the $2.1 billion Toledo Supplier Park, where the redesigned 2007 Wrangler is being built, is a global melting pot that breaks with industry norms at every turn.A German company, Kuka Flexible Production Systems, runs the body shop. A Canadian-Austrian conglomerate, Magna Steyr, runs the paint shop. Korean Hyundai Mobis makes the chassis modules. Their workers are housed under the same roof as DaimlerChrysler employees. Some of them will be making the same wages as their DaimlerChrysler peers. Others - the chassis module assemblers working for Hyundai Mobis - will not. The second-tier wage arrangement has been sanctioned by UAW Local 12, a local with a past reputation for militancy. Final contract negotiations are not yet complete.It's all part of what Chrysler officials are calling their "noble experiment."Tom LaSorda, CEO of the Chrysler group, said Chrysler is asking itself three questions with the Toledo project: "Can our organization operate without boundaries? Can we integrate our business partners? And can we use flexibility?"Sean McAlinden of the University of Michigan Center for Automotive Transportation calls the plant "a real sea change in the way we assemble vehicles.""I think the whole industry is going to watch and see if this one works," McAlinden says. The partnership with suppliers and UAW Local 12 helped keep Wrangler production from moving to Mexico.Supplier investment is also helping cash-strapped Chrysler save $300 million in capital spending. That money was redirected for product development and other uses, says Frank Ewasyshyn, Chrysler's executive vice president of manufacturing."You can put back what you save in more products," he said last week before ceremonies marking the opening of the plant.The Chrysler group did spend $600 million to build and equip the assembly portion of the Toledo Supplier Park. The plant replaced an antiquated Jeep assembly plant nearby.The supplier park is a first for DaimlerChrysler in the United States. The company's other supplier park is at the Smart plant in Hambach, France.Ron Harbour, president of Harbour Consulting in Troy, Mich., which researches auto manufacturing, says the project reduces Chrysler's financial risk - but also its control over car building: "We'll see how it works. It could spread, or it could be the only one they ever do." You may e-mail Dave Barkholz at dbarkholz@crain.comYou may e-mail Bradford Wernle at bwernle@crain.com

Jeep's Toledo trade-off: Lower costs, less control

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