Important questions on new local axle plant

By MIKE CONNELL | Times Herald

DaimlerChrysler AG is expected to announce plans today to spend $700 million on a state-of-the-art axle plant in St. Clair Township. Gov. Jennifer Granholm and Ron Gettelfinger, president of the United Auto Workers, are scheduled to join company officials for the announcement at 12:30 p.m. at the Chrysler Group's headquarters in Auburn Hills. At 4 p.m., local officials and the Economic Development Alliance of St. Clair County plan a press conference at Crystal Gardens in Marysville. Here is a look at the project in a question-and-answer format: Question: Where will the axle plant be built? Answer:On the Jim Stephenson farm in St. Clair Township. The 211-acre parcel is bounded on the east by Busha Highway, on the west by the CSX tracks (the old Port Huron & Detroit Railway) and on the north by Davis Road and the Marysville city limits. A neighboring farm and the Keg and Cone Party Store are on its southern edge. Q: Who controls the property? A:The Economic Development Alliance holds a six-month option on the property. Marysville City Manager Jack Schumacher said the city hopes to buy the property for $3 million. It would then annex the property and donate it to Chrysler. The city would borrow the $3 million from a local bank, and it hopes to recoup its investment within five years by capturing property taxes. The factory is expected to go on the tax rolls with a value of about $370 million. (The remainder of the $700 million pricetag involves "soft costs" such as engineering and design.) Q: What is the timetable? A:It is quite ambitious. Chrysler hopes to break ground before summer on a 750,000-square-foot structure. Work is expected to take 18 months and will provide hundreds of union construction jobs. If all goes according to plan, machinery and other equipment would be installed in the first half of 2009 with production beginning around mid-year. Q: How many jobs are we talking about? A:Initially, the plant would employ at least 1,150 workers, including 900 members of the United Auto Workers and 250 contract workers. Company and union sources described these numbers as minimums and predicted many more jobs could be added down the road if Chrysler's turnaround plan proves successful. Q: Will the company be hiring locally? A:Not right away. Chrysler is closing its 90-year-old Detroit Axle plant, where 1,646 union members now work. Hundreds of those workers are expected to transfer to St. Clair County. Members of UAW Local 961 were voting Tuesday on an agreement covering work rules for the new facility. Q: What about spinoff jobs? A:State economic officials say 10 manufacturing jobs will generate 17 other jobs - everything from restaurant workers to barbers. Under that formula, a factory with 1,150 jobs will generate an additional 1,955 jobs. Q: What will the factory produce? A:Chrysler expects the plant to produce 2.1 million axles a year for Chrysler and Mercedes. A company statement said the plant would build three families of axles "incorporating state-of-the-art designs." Chrysler executives have said the company's survival depends on building more fuel-efficient vehicles that also are nearly emission-free. Q: How does it compare with other employers? A:With 1,150 jobs, an axle plant would become the county's largest industrial employer. Chrysler would probably be the largest factory to locate in the county since 1917 when Mueller Brass moved its munitions operations into the old Cass Truck works on Lapeer Avenue. At its peak, Mueller Brass had about 5,000 employees. Q: Isn't Chrysler on the auction block? A: Chrysler Group lost $1.5 billion last year, and DaimlerChrysler executives have been meeting with potential buyers. Sale or no sale, Chrysler spokesman Mike Aberlich said the company is committed to a new axle plant. It is a key element in the turnaround plan announced on Valentine's Day. Q: What is involved in this turnaround plan? A:Part of it involves cutting costs. Chrysler is in the process of closing several facilities and slashing 9,000 hourly jobs. The turnaround plan also included a $3 billion investment in the development of a new drivetrain. The axle plant is part of that investment, which is seen as essential to the company's long-term viability. Q: What happens next? A:As you might expect, there's all sorts of red tape to be cut. Marysville and St. Clair Township will discuss numerous issues involving annexation and taxes. Chrysler and Marysville must negotiate a development agreement. Zoning changes are necessary. A so-called "local development finance authority" will capture taxes to rapidly pay off Marysville's investment. The county board and the community college will be asked to sign off on this plan, since it would affect their tax revenues. State grants and incentives are being worked out, and Chrysler is expected to receive a 12-year, 50% tax abatement. Other issues include improved roads, utilities and environmental considerations such as wetlands and noise. Q: Why is Marysville taking control of the property? A:Chrysler asked for free land and wanted access to municipal services such as water, sewer, police and fire protection. Marysville appears better positioned than St. Clair Township to meet those requirements. Q: Has the township agreed to annexation? A:Not year. Negotiations between the city and township have yet to begin. They will be looking at a so-called "425 Agreement," which is a little different than a traditional annexation. For starters, it's not permanent. After an agreed-upon time period (no more than 50 years), the property could revert back to the township. The exact time frame has to be negotiated, as does the sharing of taxes. Marysville has a much higher tax rate than the township's rate of 0.78 mills. That means Marysville could, for example, guarantee the township the tax revenues that would have been generated by a factory(0.39 mills for that 12 years that a 50% tax abatement is in effect, and then 0.78 mills). Q: Is Marysville obligated to share tax revenues? A:Maybe not. The law appears to allow annexation if Marysville owns the property, if the property is adjacent to the city limits and if the land is vacant. The city apparently can meet all three of those conditions. Mayor Gary Orr said Marysville officials hope to reach an agreement that satifies the township board "in the interest of fairness and cooperation." As a footnote, St. Clair Township is a general law township. Were it a charter township, such as Port Huron Township or Clay Township, it could have blocked an annexation. Q: Why should the township collect taxes if it's not providing services? A:St. Clair Township is being affected. For starters, it will border the factory site on three sides. Its roads and infrastructure will be affected. Also, in terms of development potential, the Stephenson farm is one of the finest parcels in St. Clair County. It borders a railroad and a state highway. It has reasonably good access to the expressways and the seaway. It has sewer and water. Two large transmission lines ensure "redundant" power, which is rare. In short, the township is being asked to surrender a wonderful piece of property that could have been developed in any number of ways. Q: Where will the plant's main entrance be located? A:On Davis Road, which means most traffic into the plant will come off Interstate 94 at the Marysville interchange and follow South Range Road to Davis Road. The main parking lot is likely to be on the northwest quadrant of the property. Q: What about those beautiful homes on the St. Clair River? A:"Chrysler is very sensitive to providing a site plan that will minimize the impact on its neighbors," said Doug Alexander of the Economic Development Alliance. He said the company would preserve the wooded "greenbelt" along Busha Highway on the southern half of the parcel. On the northern half, where River Road splits off Busha Highway, a mostly undeveloped parcel of land will separate riverfront homes from the Chrysler property. Alexander said the sprawling factory building will be no more than 40 feet high. In effect, an axle plant is a large forging mill. Alexander indicated there will be no smoke-belching chimneys or excessive noise. "You'll never see that factory (from riverfront homes)," he predicted. "Any rational person who looks at it will see there is very little negative impact." Q: Why are so many of questions about the plant still unresolved? A:This deal has come together with unusual speed. Chrysler had been looking at several sites between Detroit and Toledo. It was not until early March that the company showed interest in the St. Clair Township site. It apparently took only two or three visits for company officials to realize they had found an ideal site. Chrysler and Marysville have long and strong ties. Chrysler first came to the city in 1935, and its national parts depot has a million square feet under one roof - a building even larger than the axle plant. More than 330 people already work for Chrysler in Marysville. If the axle plant does open, the United Auto Workers expects to open a new union hall in the city.