DaimlerChrysler, Metaldyne discuss Indiana parts-plant venture

July 19, 2002

Auburn Hills, Michigan -- Bloomberg News is reporting that DaimlerChrysler AG's Chrysler unit and auto-parts supplier Metaldyne Corp. may create a joint venture at an Indiana plant where the automaker produces suspension, engine and transmission components.

The companies signed a letter of intent to consider the joint venture at the New Castle, Indiana, factory, they said in a statement. Terms weren't disclosed. The plant, which makes parts for Chrysler vehicles, has about 1,350 workers.

Nothing has been decided beyond the agreement to look into a joint venture, said Shawn Morgan, a spokeswoman for the third-largest U.S. automaker.

Chrysler has said it may sell or close several parts plants as part of a three-year plan to return to profit. Closely held Metaldyne, controlled by David Stockman's Heartland Industrial Partners LP, was formed last year out of the equity fund's acquisitions of Mascotech Inc., Simpson Industries Inc. and Global Metal Technologies Inc.

Metaldyne is investigating the possibility of absorbing the Indiana plant's workforce, said spokesman Kurt Ruecke. The two companies said they are working with the United Auto Workers and other unions that represent workers at the factory. Plymouth, Michigan-based Metaldyne now has 8,500 workers and 50 plants that make gears, spindles and sprockets used in drivetrains, which transfer power from engines to wheels.

Chrysler as part of its cost-cutting efforts has said it will close an Ajax, Ontario, plant that makes seat-back covers next year, is discussing the sale of a Huntsville, Alabama, factory and sold an Ohio air-conditioning plant in May.

Stuttgart, Germany-based DaimlerChrysler's U.S. shares rose 85 cents to $47.55. The stock has risen 14 percent this year.