Chrysler Group Recovery and Transformation Plan includes $3 billion powertrain offensive

Chrysler Group announced plans to invest $450 million in its Kenosha (Wis.) Engine Plant for a comprehensive retooling in preparation for the launch of a new family of fuel-efficient V-6 engines.

The investment and retooling are part of an extensive powertrain offensive that will commit a total of $3 billion to develop and launch the new engines — known as Phoenix engines — in addition to a dual-clutch transmission joint venture with German parts maker Getrag and new common axle family. All are part of Chrysler Group’s commitment to advanced powertrain technologies and the first step to more fuel-efficient vehicles.

Scheduled to begin production in January 2011, the plant will have an annual Phoenix production capacity of 400,000 units when it reaches full volume.

Today’s event, held at the 1.9 million square-foot plant, marks another significant milestone in the progress of the Chrysler Group’s Recovery and Transformation Plan.

Wisconsin Gov. Jim Doyle, Kenosha Mayor John Antaramian, Chrysler Group Vice President – Powertrain Manufacturing Richard Chow-Wah, Kenosha Engine Plant Manager Kevin Sell and UAW officials participated in the news event.

“This retooling investment will allow us to build an entirely new, globally competitive family of V-6 engines,” said Chow-Wah. “The Chrysler Group Recovery and Transformation Plan is focused on new products, and today’s news supports a long-term commitment to new vehicle components that support consumer demand for refined, economical-to-operate vehicles for many years to come.”

“Chrysler Group has had a 20-year-long presence in Kenosha — and even longer factoring in American Motors’ storied past,” said Sell. “With this new tooling and this new engine line, we’re demonstrating the commitment of Chrysler Group to support economic development and invest in the communities where it does business.

Retooling for the Kenosha Phoenix Engine Plant will begin in June 2010.

“Wisconsin is one of America’s leading manufacturing economies. This $450 million commitment by Chrysler to our state demonstrates that we continue to attract important investments that provide high paying jobs for our workforce,” said Wisconsin Gov. Jim Doyle. “This shows what can happen when state and local governments work together to create a business-friendly environment.”

The Governor said that Chrysler Group would receive an incentive package of Kenosha County, City of Kenosha and State of Wisconsin funds totaling $16.8 million.

Once the plant is fully operational, Kenosha Phoenix Engine Plant will employ 700 full-time workers.

“This is an important day for the future of the UAW and Chrysler Group, and in particular for the continued competitiveness of our team here in the State of Wisconsin,” said General Holiefield, UAW Vice President, who directs the union’s DaimlerChrysler Department. “We have a vision to see this company and our union grow this business and transform Chrysler Group into a stronger company that will be competitive for the long run. The investment we announce today proves that we are investing in this vision.”

Chrysler Group has had a presence in Kenosha since 1987, when American Motors Corp. was acquired by Chrysler Corporation. The company’s current 2.7- liter V-6 has been produced there since 1997. The company’s 3.5-liter V-6 was launched in 1999, part of a $624 million modernization of the plant. The plant was built in 1917.

Over the long term, the Phoenix family of V-6 engines will reduce manufacturing complexity by paring the Company’s four current V-6 engine architectures to one.

Kenosha becomes the third Phoenix engine plant announced by Chrysler Group since April 2007, joining previously announced plants in Trenton, Mich. and Saltillo, Mexico. The company will also construct an all-new plant in Marysville, Mich. to build a new line of corporate axles.