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Chrysler-Mitsubishi Announcement Expected Monday : Illinois Seen Winning Auto Plant

October 02, 1985|JAMES RISEN | Times Staff Writer

DETROIT — Chrysler and Mitsubishi Motors of Japan have apparently decided to build their U.S. joint-venture plant in central Illinois, bringing to an end a competition among four Midwestern states that had been vying for the project.

Chrysler officials refused to comment Tuesday on reports that the area around the towns of Bloomington and Normal, Ill., will be the site for the project, which is expected to employ 2,500 workers building 180,000 Mitsubishi-designed small cars a year starting in 1988. But state officials in Michigan, conceding that they have lost in the competition, said they were virtually certain that Illinois has won.

Illinois officials insisted Tuesday that they don't know for sure but said they remain "optimistic" about the state's chances. But they added that they have been told that a press conference will be held at Chrysler headquarters next Monday to announce the selection of a site and that the governors of the states that were considered will be informed Sunday.

Chrysler, which reached a joint venture agreement with Mitsubishi in April after years of negotiations, said earlier this year that it was considering only the states of Ohio, Michigan, Indiana and Illinois as possible sites for the project.

But Illinois has apparently been the front-runner for some time. Government officials say Mitsubishi did not want to be overshadowed by building the facility in a state where another Japanese auto maker had already located, dimming the chances of both Ohio, where Honda has a large assembly complex, and Michigan, where Mazda is building a new plant. State officials say the joint venture also wanted to be centrally located in the Midwest but close to a Great Lakes port such as Chicago, in order to reduce the costs of importing many of its components from Japan.

Those factors, along with the state's aggressive campaign to win the plant, gave Illinois the edge, Michigan officials believe. Walt Sorg, a spokesman for the Michigan Department of Commerce, said Michigan recently dropped out of the bidding because the joint venture was asking for too many costly state-financed incentives. He said the venture wanted more from the state, in proportion to the number of jobs to be created and the amount of investment at stake, than Michigan had given to Mazda.

'Innovative' Incentives

Illinois officials acknowledged Tuesday that they have put some "innovative" incentives on the table to lure the joint venture. Included is an offer to set up a rigorous Japanese-style educational program, with Japanese-speaking teachers, within the local public schools so that the children of Mitsubishi managers from Japan will not find themselves lagging behind their classmates when they return home from the United States.

Still, the competition for the joint-venture project has remained relatively low key and hasn't turned into the kind of circus that surrounded General Motors' selection of a site for its Saturn plant earlier this year. That industrial plum eventually went to the tiny town of Spring Hill, Tenn.

The Chrysler-Mitsubishi project, which will be managed by Mitsubishi, will be the second U.S. joint venture between American and Japanese auto makers; GM and Toyota began small-car production at their joint venture in Fremont, Calif., last December. The Chrysler-Mitsubishi project will be 50% owned by each firm and will supply subcompacts for both the Chrysler and Mitsubishi dealer networks in the United States.

In addition to the 2,500 jobs at the assembly plant itself, Chrysler says the joint venture will create an additional 8,800 supplier jobs at parts plants around the country. (Chrysler and Mitsubishi have already agreed that the United Auto Workers will represent the joint venture's work force.)

The joint venture will be producing Chrysler's smallest U.S.-built cars, since the No. 3 auto maker plans to phase out its Dodge Omni and Plymouth Horizon subcompacts at the end of 1986. Chrysler's Belvidere, Ill., assembly plant, which currently builds the Omni and Horizon models, is expected to switch over to the production of a new line of front-wheel-drive large cars in 1987.

Chrysler, which is a part owner of Mitsubishi and is increasing its stake to 24%, will also continue to import Mitsubishi-built subcompacts and other models from Japan.

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