Econmoic Development officials in Michigan were elated in February when they landed a factory that will pay workers an average of $410 a week to make parts for DaimlerChrysler AG's planned Jeep assembly plant in Toledo. Left unsaid, however, was that a portion of the work was coming from inside the Toledo plant, where employees are paid nearly twice as much for the same work.
And the Michigan plant, to be built near Blissfield in Monroe County, isn't alone. Since the nation's No. 3 car maker revealed in mid-1997 that it would spend $600 million to replace its antiquated Toledo assembly plant with a modern factory to build a new generation of Jeep Cherokees starting in 2001, cities and villages in northwest Ohio and southeast Michigan have scrambled to lure companies that have won contracts to supply parts to the new operation.
The efforts, usually involving millions of dollars in taxpayer incentives, have paid off.
So far, announcements have been made about four new supplier plants that will be built at a cost of $91 million and will employ 830. Economic development officials in the region are negotiating with at least three other firms
Lost in the hoopla, however, is the reality that some jobs in the new plants aren't new jobs at all, but positions recycled from Toledo Jeep.
When the assembly plant opens, the company will make greater use of outside suppliers to perform work now done in-house.
According to people familiar with the factory, about 28 components that now arrive separately will come into the new plant as pre-assembled parts clusters or "modules."
What's more, the suppliers will pay their workers 15 per cent to 50 per cent less than the $20 an hour paid to unionized workers at the Jeep plant.
A DaimlerChrysler spokesman downplayed the development, saying no current Jeep workers will be laid off and that the changes were inevitable in a company with a history of heavy use of outside suppliers to trim costs and boost profits.
