Chrysler wants to share space

A Chrysler dealership sign

TEXT OF STORY

Scott Jagow: Hybrid cars are selling so well, Toyota can't keep up with the demand. Today, Toyota said it needs to make more hybrid batteries, but doesn't have the production space to do it. And the company says it can't add new assembly lines until next year. So, I wouldn't expect the Prius to drop in price anytime soon.

U.S. automakers have the opposite problem. They're closing assembly lines and shutting down plants. But Chrysler has an idea: It plans to lease some of its space to a Canadian company.
Amy Scott reports.


Amy Scott: If the deal goes through, Chrysler says it will lease part of its Kokomo, Indiana transmission plant to Canadian parts maker Linamar.

Chrysler workers will provide the labor. They'll start out making parts for Chrysler's new fuel-efficient engines and transmissions. But they could also do work for other Linamar customers.

John Casesa runs a firm that advises and invests in the auto industry. As U.S. truck sales continue to slide, he expects to see more creative strategies like this one. He says you might even see GM and Ford get together to share plants.

John Casesa: These individual companies don't have enough volume in their plants to support those facilities and those jobs anymore, so it makes more sense to work together rather than to have two separate plants running at low capacity.

The Chrysler-Linimar deal is expected to close sometime this summer. A Chrysler spokeswoman says the company is exploring a similar partnership at one of its Canadian plants.

I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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