DaimlerChrysler May Sell Extra Plants in New York and Roitsch

AUBURN HILLS, Mich. February 20, 2003; Jeff Green writing for Bloomberg reported that DaimlerChrysler AG, which is considering the sale of some of its 23 auto-parts plants to cut costs, may sell factories in New York and Germany that make parts for four-wheel-drive vehicles.

Both plants were part of the company's New Venture Gear joint venture with General Motors Corp. The companies have dissolved the venture, and DaimlerChrysler must decide whether to keep the sites in Syracuse, New York, and Roitsch, Germany.

DaimlerChrysler, the world's fifth-biggest automaker, is "looking at working with an adviser to make recommendations as to the best business model," David Barnas, a spokesman for the company's Chrysler unit, said in an interview. The company hasn't chosen an adviser yet, he said.

Chrysler has said it will close this year a Canadian plant that makes automotive trim and announced joint ventures at two other plants in Ohio and Indiana, as it tries to reduce expenses and meet its goal of a $2 billion operating profit this year. The unit, which ranks third in sales among U.S. automakers, had a $1.9 billion loss in 2001 and expects to report tomorrow that it had a "slight" profit for 2002.

Chrysler, which owned 64 percent of New Venture Gear, took back control of the Troy, Michigan-based venture's Syracuse and German facilities, while General Motors took ownership of a Muncie, Indiana, plant. The venture, formed in 1990, was the world's largest maker of four-wheel-drive systems. It had about 5,350 employees and 2001 sales of about $1.6 billion.

Potential buyers of New Venture Gear include BorgWarner Inc., the world's second-biggest maker of four-wheel-drive systems; American Axle & Manufacturing Holdings Inc.; Canada's Magna International Inc.; the U.K.'s GKN Plc; and closely held ZF Friedrichshafen AG, said Robert Hinchliffe, a UBS Warburg LLC auto-parts analyst who rates BorgWarner "neutral" and American Axle "buy." He doesn't own either company's shares.

A purchase by BorgWarner might run into resistance from U.S. antitrust officials because the company would end up with 70 percent of the world market for four-wheel-drive systems and account for most systems sold to General Motors, Ford Motor Co. and Chrysler, Hinchliffe said.

Chrysler previously hired Goldman Sachs to explore the sale of a Huntsville, Alabama-based electronics plant that makes radios and other parts.

Chrysler continues to look at the "possible divestiture regarding our component plants," Barnas said.