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Tuesday, October 30, 2012

Chrysler CEO: Jeep Production Isn\'t Moving to China

Chrysler's chief executive on Tuesday strongly refuted claims that production of Jeeps would shift to China, an insistence that cast further doubt on the Romney campaign's recent efforts to undercut President Obama's support for the auto industry as it fights for Ohio's 18 electoral votes.

In an e-mail to employees, the chief executive, Sergio Marchionne, said that Jeep's commitment to the United States was unequivocal. “I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China,” he wrote. “It is inaccurate to suggest anything different.”

Mr. Marchionne's response - an unusually forceful gesture from the chief executive of a major American corporation a week before Election Day - came as the politics of the auto bailout took center stage in the presidential campaign.

The Romney campaign has come under considerable criticism in recent days for taking liberties with the facts in a new te levision commercial that suggests Jeep, a recipient of federal bailout money, will soon outsource American jobs to China. Chrysler, Jeep's parent company, does not in fact have plans to cut its American work force but is considering opening a facility in China where it would produce Jeeps for sale locally.

Mr. Marchionne said that those efforts would only bolster the strength of Chrysler in the United States, not undermine it.

“Jeep is one of our truly global brands with uniquely American roots. This will never change,” he said.

The politics of the auto bailout have become a vexing problem for Mr. Romney as he competes fiercely with President Obama for Ohio. Mr. Obama carried the state in 2008 with just 51.2 percent of the vote and has remained ahead of Mr. Romney in many recent polls, a strength that is due in some measure to the rebound of the auto industry.

Mr. Romney opposed the bailout, most famously in a New York Times op-ed that carried the headline “Let Detroit Go Bankrupt.” Mr. Romney did not write the headline; the newspaper did. But even his supporters in the Midwest have questioned his logic in arguing that Chrysler and General Motors should have been denied federal assistance, which he deemed at the time “a handout.”

The Romney campaign has insisted that its most recent ad - which is carefully worded enough that it is not factually inaccurate - merely states the truth: that Jeeps are not currently made in China but will be soon. But the ad makes no mention of the point Mr. Marchionne and others have made, which is that no American jobs will be lost.

The memo from Mr. Marchionne is below:

Chrysler Group's production plans for the Jeep® brand have become the focus of public debate.

I feel obliged to unambiguously restate our position:  Jeep production will not be moved from the United States to China.

North American production is critical to achieving o ur goal of selling 800,000 Jeep vehicles by 2014. In fact, U.S. production of our Jeep models has nearly tripled (it is expected to be up 185%) since 2009 in order to keep up with global demand.

We also are investing to improve and expand our entire U.S. operations, including our Jeep facilities. The numbers tell the story:

n  We will invest more than $1.7 billion to develop and produce the next generation Jeep SUV, the successor of the Jeep Liberty - including $500 million directly to tool and expand our Toledo Assembly Complex and will be adding about 1,100 jobs on a second shift by 2013.

n  At our Jefferson North Assembly Plant, where we build the Jeep Grand Cherokee, we have created 2,000 jobs since June 2009 and have invested more than $1.8 billion.

n  In Belvidere, where we build two Jeep models, we have added two shifts since 2009 resulting in an additional 2,600 jobs.

With the increase in demand for our vehicles, especially Jeep b randed vehicles, we have added more than 11,200 U.S. jobs since 2009.  Plants producing Jeep branded vehicles alone have seen the number of people invested in the success of the Jeep brand grow to more than 9,300 hourly jobs from 4,700. This will increase by an additional 1,100 as the Liberty successor, which will be produced in Toledo, is introduced for global distribution in the second quarter of 2013.

Together, we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world's largest auto market, in order to satisfy local market demand, which would not otherwise be accessible. Chrysler Group is interested in expanding the customer base for our award-winning Jeep vehicles, which can only be done by establishing local production. This will ultimately help bolster the Jeep brand, and solidify the resilience of U.S. jobs.

Jeep is one of our truly global brands with uniquely American roots. This will never change. So much so that we committed that the iconic Wrangler nameplate, currently produced in our Toledo, Ohio plant, will never see full production outside the United States.

Jeep assembly lines will remain in operation in the United States and will constitute the backbone of the brand.

It is inaccurate to suggest anything different.

Sergio Marchionne