Chrysler Group said that it is studying a plan to invest almost $200 million for its Mack I Engine Plant in Detroit to increase the output of the V-6 Pentastar engine. Chrysler said that before it embarks on the project, it has to develop an incentive package with the City of Detroit and State of Michigan that may result to the creation of about 250 new jobs in manufacturing.
Last week, Chrysler said that it intends to stop operations at the adjacent Mack II Engine Plant in September as it halts rolling out the 3.7-liter V-6 engine. At this plant, about 200 workers will get layoff notices. However, they will be re-assigned to other Chrysler factories in the region. Chrysler bought the 1.4-million-square-foot Mack I Engine Plant in 1953.
Engine production began in 1998. If Chrysler is able to proceed with this plan, it would be the third Chrysler engine plant to produce Pentastar engines. The two other factories are located in Trenton, Mich., and Saltillo, Mexico.
Jodi Tinson, Chrysler spokeswoman’s, said that if Chrysler could reach a deal with state and local officials, Mack I would halt the production of 4.7-liter V-8 engines and begin making Pentastar V-6 models by the end of next year. For now, the entire Pentastar engine lineup uses displacements of 3.6 liters.
However, Chrysler's product plan indicates that it is thinking about other displacement sizes. Tinson said she can’t say if Mack I would produce a 3.6-liter or other sized version of the engine. In 2009, Chrysler made five V-6 engines that have displacements that range from 3.3-liters to 4.0-liters.
Since that time, Chrysler has been discontinuing other V-6 offerings to favor the 3.6-liter Pentastar, which is used on majority of its most popular models. Chrysler has been aiming to expand the output of the 3.6-liter Pentastar engine. It called off the scheduled shutdown for summer this year at its Trenton engine plant. Both Trenton and Saltillo have been working overtime.
Earlier this year, Chrysler withdrew its application to access up to $3.5 billion in loans from the US Department of Energy, noting the terms would have negatively affected the carmaker. This was confirmed through a notice with the U.S. Securities and Exchange Commission – signed by Chief Financial Officer Richard Palmer – saying that the carmaker “announced its decision to withdraw its Section 136 loan application with the U.S. Department of Energy.”
According to a Chrysler spokesperson said the terms proposed by the DOE were very restrictive, and compliance would negatively affect the company’s operational flexibility. Chrysler had sought the financing under the Advanced Technology Vehicles Manufacturing loan program since Congress first approved it in 2007. The budget of $25 billion program reimburses auto companies for expenses they made on upgrading older facility to build more fuel efficient vehicles.