DETROIT (AP) — Chrysler Group LLC gave a big boost to the battered Michigan economy Friday when it announced plans to add about 1,100 workers to help build the new Jeep Grand Cherokee.
The company made the announcement at a Detroit factory as it celebrated the start of Grand Cherokee production. Chrysler said it expects strong sales of the new sport utility vehicle, which is due in showrooms next month.
Almost all the workers will be new hires, which Chrysler can pay about $14 per hour, about half the hourly rate received by current workers represented by the United Auto Workers union. The workers will staff a second shift at the factory, called the Jefferson North Assembly Plant, starting July 19.
The announcement is good news for Michigan, which has the highest unemployment rate in the nation at 14 percent and has struggled for years with the decline of Detroit’s automakers.
CEO Sergio Marchionne joined 1,400 current plant workers and a number of federal, state and local officials to celebrate the start of Grand Cherokee production. The new vehicle is more efficient and car-like than the current model, Chrysler said.
Marchionne said the additional jobs show how confident he and other company executives are about the success of the Grand Cherokee.
When asked whether the hirings are a gamble based on the state of the economy, Marchionne smiled and said: “Don’t be so skeptical. It’s a good day. Enjoy it.”
Chrysler has only about 100 laid-off workers in the Detroit area who haven’t been recalled, so the company can take advantage of a provision in its contract with the UAW that gives newly hired workers much lower wages and benefits.
Thousands of factory workers took buyout and early retirement offers when Chrysler ran into financial difficulties in 2008 and last year. The company eventually went through bankruptcy protection, cleansing it of burdensome debt.
“This day will go down in history that Chrysler is indeed the comeback kid,” United Auto Workers Vice President General Holiefield said.
At the celebration, Marchionne, who also heads Italy’s Fiat Group SpA, drove one of the new sport utility vehicles through the plant and to a stop in front of the stage. He and front-seat passenger Michigan Gov. Jennifer Granholm emerged from the SUV to applause from the workers.
“We’re here to declare that Chrysler is back!” Granholm shouted.
Chrysler Group LLC began making the Grand Cherokees in recent weeks, and Friday’s event served as the official launch.
The start of production was eagerly awaited by Chrysler dealers, who have been without a totally new product since the Ram pickup came out late in 2008.
Mike Andretta, owner of a Chrysler dealership in Beaver Springs, Pa., says he’s hoping the new vehicle will be a boost to his bottom line.
“We’re surviving month-to-month. We need new product — quickly,” he said. “The old Grand Cherokee’s been kind of dead for the last two years now, so that market we don’t really get a lot of business in any more.”
“Once the word gets out, I think it’s going to be a success,” Andretta said. “I don’t think any dealership will survive solely on the new Jeep Grand Cherokee, but it’ll help, and we need new stuff.”
The jobs and new product celebration capped a busy week for Chrysler. On Thursday Marchionne said the company is considering a public stock offering sometime next year.
Marchionne said there is enough demand in the marketplace to support initial public offerings for Chrysler and General Motors Co., both of which were restructured in government-funded bankruptcy protection cases last year.
He also said Chrysler struggled through a painful restructuring last year, and he never wants to see the company lose money again, predicting that U.S. vehicle sales will top 11 million this year and 12 million in 2011.
Sales slumped to 10.4 million last year, the worst in more than a quarter century.
Chrysler would have been sold off in pieces in late 2008 or early 2009 if the U.S. government had not stepped in with billions in aid. The government put Marchionne in charge of turning around the Auburn Hills automaker and gave Fiat a 20 percent stake in the company.
But on Friday, Marchionne was all smiles, talking about the “milestone launch” of the Jeep Grand Cherokee, a totally new version of the venerable SUV.
The new model is more efficient than the old one, behaving more like a car than a truck on suburban highways. Yet it still has off-road capability, the company said.
Governor Granholm was just happy to see jobs added in Michigan rather than southern states, where Asian and European automakers have set up factories.
“It’s not made in some Southern cornfield plant,” she said. “It’s made right here.”
AP Auto Writer Tom Krisher in Detroit contributed to this report.