Chrysler To Sell Two Axle Plants
Because outsourcing axle-making has turned out so well for GM, Chryler will be selling two Michigan-based axle factories. The Wall Street Journal reports that Chrysler has approached Dana Holding Corp and American Axle (as well as other private equity firms) with an offer to sell the two plants for $400m. Shockingly, "the offer has sparked little interest," according to "people familiar with the discussions." The two factories on the sale block are Detroit Axle and Chrysler's Marysville axle plant, the latter of which is still being built. The usual Michigan labor bugbears appear to be the main culprit for the lack of interest, as any buyer would have to also buy out Detroit Axle's UAW contract. Still, Chrysler has got to slim down, meaning the price might just drop until someone can be saddled with find value in the axle plants. We'll be right here holding our breath.
More by Edward Niedermeyer
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Maybe GM could buy it to offset another UAW strike...for a short time.
P.S. That is a Dana axle in the photo :).
Detroit Axle is ANCIENT. The plant is over 90 years old (built in 1917). Sure it has been updated many times over the years, but you can only do so much with a plant that old. The layout has gotta be very difficult to make work for modern manufacturing. Add to the ancient building is the fact this plant is in a real garbage area of Detroit doesn't help. The neighborhood there is terrible. No places to live, eat, shop, nothing. Its a plant in an urban prairie almost. Can't help either.
I'm beginning to see signs of a real strategy at PentaCerberus. I think they are going to try to copy Fiat, which just reported a billion and a half profit last year... that's after GM paid two billion not to take over the business. Strong minivan, add 300c and a jeep or two, buy a small car from Nissan, rebadge a Fiat or two subcompact, refresh the Ram for commercial business...you have the makings of as strong niche player. IF they can execute...