Chrysler Expands Manufacturing Capacity by 17 Percent with $1.8 Billion Investment

The Chrysler Corporation announced plans to spend $1.8 billion over three years to increase its manufacturing capacity by 17 percent, in anticipation of rising vehicle sales, particularly of sport-utility vehicles, pickup trucks, and mini-vans. The move is expected to generate up to 6,000 new jobs in the United States and Canada, with some jobs going to laid-off union members and at least several thousand new workers being hired.

Key Takeaways:

• Chrysler's $1.8 billion investment will increase its worldwide vehicle-making capacity to 3.5 million units a year, up from 3 million currently.
• The increase is expected to generate up to 6,000 jobs in the US and Canada, with some jobs going to laid-off union members and new workers being hired.
• Chrysler will retool its St. Louis North plant to add capacity for an additional 130,000 full-size Ram trucks, starting in the third quarter of 1995.
• The company will also add a third work shift at its Jefferson North Assembly plant in Detroit, which builds the Jeep Grand Cherokee, a popular sport-utility vehicle.
• Chrysler will spend $120 million at its Trenton, Mich., engine plant to build an additional 100,000 3.3-liter engines for mini-van production.
• The company will also spend $20 million on capital improvements at its Belvidere, Ill. assembly plant, adding about 14,000 units of capacity.
• Chrysler expects to sell more sport-utility and truck-like vehicles, as surveys show that younger buyers (Generation X) are increasingly interested in these types of vehicles.
• Light-truck sales as a proportion of total vehicle sales have been increasing for 25 years, with light trucks accounting for about 40 percent of total sales.
• At Chrysler, the light-truck segment, including mini-vans, accounts for almost 60 percent of total sales.

Statistics:

• $1.8 billion: the amount Chrysler will invest over three years to increase its manufacturing capacity by 17 percent.
• 6,000: the estimated number of new jobs that will be generated in the US and Canada.
• 3.5 million: the new worldwide vehicle-making capacity goal, up from 3 million currently.
• 130,000: the additional full-size Ram trucks Chrysler plans to produce at its St. Louis North plant.
• 100,000: the additional 3.3-liter engines Chrysler plans to produce at its Trenton, Mich., engine plant.
• 14,000: the additional units of capacity Chrysler will add at its Belvidere, Ill. assembly plant.
• 25 years: the length of time light-truck sales have been increasing as a proportion of total vehicle sales.
• 40 percent: the proportion of total sales accounted for by light trucks today.
• 60 percent: the proportion of total sales accounted for by the light-truck segment, including mini-vans, at Chrysler.

Sources:

• "Chrysler Plans $1.8 Billion Expansion to Meet Demand for Sport-Utility and Trucks" (The New York Times)
• Robert J. Eaton, Chairman and Chief Executive of Chrysler Corporation
• J. Michael Losh, G.M. Vice President and Group Executive for Car and Truck Divisions