Chrysler Puts Axle Plants Up for Sale
April 28, 2008

Chrysler has quietly begun looking for buyers for two Michigan axle plants – one still under   construction, sources told the Wall Street Journal, which says the move reflects the automaker’s search for a leaner business model.

Over the past two months Chrysler has approached two axle suppliers, Dana Holding Corp., which recently emerged from bankruptcy, and American Axle & Manufacturing Holdings Inc., which has been struck by workers at five plants since late February, about buying the two plants for about $400 million. The offer has also been made to private-equity groups, the newspaper reported in Monday’s edition based on comments from anonymous sources.

Chrysler announced plans to build a new axle plant in Marysville, Mich., last year to replace an aging facility in Detroit known as Detroit Axle. Now, Chrysler is looking for a buyer to finish building the plant and later close the older plant.

The Detroit Axle plant opened in 1917 and employs about 1,600 union workers. A year ago, three months before Cerberus acquired it, Chrysler said it would invest $700 million to build a new axle plant in Marysville. The facility is expected to employ about 900 workers.

Goldman Sachs Group Inc. is advising Chrysler on the potential sale, sources told the journal. But so far, there’s been little interest in the plants, in part, because a buyer would have to work with the United Auto Workers union.

Chief Executive Robert Nardelli, brought in by new Chrysler owner Cerberus Capital Management, has said the automaker is looking to get out of production of components that customers don’t see, like axles, and focus on interiors and fuel-saving technologies. He has also said Chrysler would look for partnerships and alliances to share the cost of developing and making components, like the one it formed with Germany Getrag to produce new transmissions.

Photo by Chrysler
Then DaimlerChrysler executives, local government official and United Auto Workers union leaders lead the parade for the May 21, 2007 groundbreaking of Chrysler's Marysville Axle Plant, now up for sale.

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