DETROIT, May 23 (UPI) -- German-American automaker DaimlerChrysler has decided not to build a new $1.2 billion assembly plant in Windsor, Canada, because of sagging auto sales.
Chrysler's domestic sales fell 7 percent in the first quarter of 2003.
The decision -- announced Thursday -- is a blow to the Canadian Auto Workers union, which has lost nearly 13,000 members since 1999 as automakers built new facilities in Mexico and the southern United States.
"After months of analysis, Chrysler Group President and Chief Executive Officer Dieter Zetsche announced today that a proposed new manufacturing facility, incorporating innovative supplier initiatives for Windsor, Ontario, will not be built because of business viability issues," a press release said.
Chrysler had touted Windsor as a site of a new state-of-the-art assembly plant that would have turned key steps of production -- like chassis assembly and paint and body work -- for a new small Dodge M80 pickup over to suppliers, who would have staffed and managed those operations.
"Certainly, we believe there is potential in this business model and we will continue to look for opportunities to explore it," Zetsche said.
The decision will not affect Chrysler's plans to introduce seven new vehicles in the next five years, company officials said.
The Windsor assembly plant would have employed 2,900 CAW members.
"This will have an impact on our labor relations with them," an angry CAW President Buzz Hargrove told Friday's Detroit Free Press. "Their credibility is at stake after this. I don't know how the UAW can negotiate with them."
Zetsche said Chrysler never promised to build the Windsor plant but the proposal was part of an agreement reached with the CAW last fall just 30 minutes before a strike deadline.
"We did not give a promise that we would build that plant," said Zetsche. "What we said, and we said it clear and loud, was that we would try to do everything possible to make that a viable business case but that we only could proceed if there would be an economic basis for this plant."
Chrysler plans to close a van plant in Windsor idling 475 CAW members but said it would invest $1.9 billion in Canadian operations, including the $1 billion Brampton Assembly Plant that will manufacture full-sized Chrysler 300 and Dodge Magnum sedans.
Chrysler now builds its crossover Chrysler Pacifica in Windsor.
