Struggling Visteon to build plant

Highland Park wins jobs

February 14, 2007

BY JASON ROBERSON

FREE PRESS BUSINESS WRITER

Visteon Corp., in the middle of trying to sell or close some unwanted plants, said Tuesday it will spend $35 million to build a plant at Chrysler Corp.'s old headquarters in Highland Park.

VC Ram LLC, Visteon's wholly owned subsidiary that makes auto-interior parts, will create 175 jobs at the 217,000-square-foot plant.

Production wages at the plant will start at $9 per hour, rising to $11 an hour by 2010 -- still far below the $27 an hour Visteon paid 18,000 UAW members before transferring them back to Ford Motor Co. in October 2005.

Nevertheless, the investment adds to ongoing efforts to turn around Highland Park, a poor city of 2.9 square miles that is a suburb of Detroit. Almost 80% of the residents receive some sort of financial assistance, said Bill McConico, Highland Park city attorney.

When Chrysler announced in 1992 it was leaving Highland Park, it also took 70% of the tax base, Free Press reports show.

"It's been on some hard times," McConico said. "But we're aggressively courting industry to come to Highland Park, as well as residents to move back."

Highland Park is one of a handful of cities that can lay claim to the title of birthplace of the American automobile. In Highland Park, Henry Ford built the Model T, offered his workers the revolutionary wage of $5 a day and pioneered the assembly line.

Also, Chrysler had its longtime headquarters in Highland Park, and muscle cars cruised Woodward Avenue.

Gov. Jennifer Granholm said Visteon's decision means her economic plan is working.

"The company's investment in Highland Park will bring good-paying jobs to the community and strengthen Michigan's position as the global leader in automotive research and development," Granholm said.

The Van Buren Township-based supplier received a 7-year, $1.73-million Single Business Tax credit from the Michigan Economic Development Corp., and the City of Highland Park proposed a 7-year, $4.5-million tax abatement to keep the supplier from building in Tiffin, Ohio. The MEDC approved the deal Tuesday.

Visteon considered several options for its new plant but narrowed the choice between Tiffin and Highland Park, according to a memo from James Donaldson, the MEDC's vice president of business development. Business costs in Ohio and Michigan were similar.

The State of Ohio offered incentives to locate the plant in Tiffin that included job-creation tax credits worth more than $1 million, a direct, low-interest loan, and recruitment and training assistance worth an estimated $270,000.

Visteon's construction comes while the company is supposed to be restructuring. In January 2006, Visteon announced a 3-year, $400-million restructuring plan to improve profitability, which included selling facilities and exiting businesses.

For the three months ending Sept. 30, the company reported a loss of $177 million, or $1.38 per share, a 14% improvement from losses of $207 million, or $1.64 per share, during the same period a year earlier. Sales for the quarter were $2.6 billion, down 37% from $4.1 billion during the same period a year earlier.

Lower sales also reflect last year's completion of the transfer of 23 Visteon facilities to Automotive Components Holdings LLC, a new subsidiary owned and managed by Ford.

Visteon still relies on Ford for 44% of its sales, down from 64% during the same period a year ago. The decrease reflects the fact that the plants Visteon shed primarily supplied parts to Ford.