AP Source: Chrysler will invest in Mich. plant

AP News
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Posted: Dec 16, 2009 5:03 PM

Chrysler LLC will announce Thursday that it plans to invest millions in a factory near Detroit to build fuel-efficient four-cylinder engines designed by Italian automaker Fiat Group SpA, a person briefed on the announcement said.

The Auburn Hills, Mich., automaker and Michigan Gov. Jennifer Granholm have scheduled a news conference to announce the investment in the factory located in Dundee, Mich., south of Detroit, said the person, who asked not to be identified because the announcement had not been made.

The Michigan Economic Growth Authority Board in November approved a $4.6 million, 10-year tax credit for Chrysler in exchange for investing $179 million in the plant to create 155 jobs.

The Dundee north plant, which opened in 2005, already produces Chrysler's four-cylinder engines. The investment would go into the south plant, which will build a 1.4-liter Fiat engine that will go into the Fiat 500 subcompact and other Chrysler models.

The new engine "introduces Fiat's innovative advanced technologies to reduce engine emissions and improve fuel economy in Chrysler's products," according to a memo presented to the growth authority board.

Under the terms of the tax break, Chrysler must keep the 200 jobs already at the north plant.

Michigan was competing with Saltillo, Mexico, for the plant, and the tax break was needed because Chrysler could pay lower wages and taxes in Mexico, according to the memo. Saltillo also is closer to the factory in Toluca, Mexico, where the 500 will be built.

Italian automaker Fiat took control of Chrysler after it emerged from bankruptcy protection in June. Fiat owns 20 percent of Chrysler, with a chance for that to grow to 35 percent.

It plans to bring the 500 minicar to the U.S. and sell it in Chrysler dealerships starting in 2012.

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Associated Press Writer Kathy Barks Hoffman in Lansing, Mich., contributed to this report.