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Detroit Axle on the Block?

April 29, 2008
Report says Chrysler is offering two plants to rivals for $400 million

The Wall Street Journal reports Chrysler Corp. is seeking to sell its Detroit Axle plants in Michigan — one in Detroit and another that’s still under construction in suburban Marysville. According to the paper, the strategy of Chrysler’s new ownership is to “reduce the capital it traditionally has invested in major components.”

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. About a year ago Chrysler announced a $700-million project to build a new plant in Marysville, MI, to replace eventually the 90-year-old operation in Detroit.

The new plant was a project initiated by the former Chrysler management, under DaimlerChrysler's ownership, before the organization was sold to Ceberus Capital Management last spring.

The search for a buyer has not been successful. The Journal reports Chrysler has contacted Dana Holding Corp. and American Axle & Manufacturing, two of its competitors in axle manufacturing, and that the operations are priced at $400 million.

A new owner would have to complete construction of the new plant, and assume the cost of phasing out the Detroit plant would fall to the new owners.