Chrysler Will Lease New Axle Plant to ZF

Replacement operation due to start up in 2010

Chrysler L.L.C. is building a new plant in Marysville, MI, to replace its axle-manufacturing subsidiary Detroit Axle, but following a partnership agreement the facility will be operated by ZF Friedrichshafen AG, a driveline/chassis manufacturer based in Germany.

The $700-million project was announced in April 2007. The 90-year-old Detroit Axle plant will be phased out, and the new plant is scheduled to start up in 2010.

Detroit Axle manufactures front- and rear-drive axles for Chrysler trucks, and trailing axles for Dodge and Chrysler mini-vans. Powertrain components for some Dodge and Chrysler passenger cars also are produced there.

The new plant will produce three families of axles, totaling 500,000 units/year. The manufacturing strategy involves consolidating the number of axles used for Chrysler models, including a family of front-wheel-drive axles and a family of rear-wheel-drive axles, both based on ZF designs, and a Chrysler-designed rear-wheel-drive axle.

The financial terms of the partnership have not been released. Chrysler and ZF stated that the partnership is still contingent on state and local incentives. It ensures worker retention and a “phased changeover” from the Detroit Axle operation as the new plant ramps up.

"This partnership gives Chrysler access to advanced axle technologies from a partner that is a leading worldwide supplier of driveline and chassis technology," stated Chrysler L.L.C. president and vice chairman Tom LaSorda. "Advanced axle technologies are key to our powertrain offensive, aimed at improving the fuel efficiency of our products. And working with a partner allows us to reduce development costs and capital investment requirements. In the end, it's the customer who wins. These axles promise better mileage, better quality and better refinement."

ZF CEO Hans-Georg Haerter stated the partnership “gives us the opportunity to bring a key piece of ZF driveline and chassis technology to a large volume of future North American vehicles with a skilled workforce in a state-of-the-art manufacturing facility."

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