Axle deal reached with ZF

Posted on Tuesday, November 18th, 2008 at 12:42 PM EST.

Chrysler LLC and ZF Friedrichschafen AG today announced the formation of a new axle manufacturing alliance.

The partnership will use Chrysler’s new Marysville (Mich.) Axle Plant to build three families of state-of-the-art axles for improved fuel efficiency.

“This partnership gives Chrysler access to advanced axle technologies from a partner that is a leading worldwide supplier of driveline and chassis technology,” Chrysler LLC President and Vice Chairman Tom LaSorda said. “Advanced axle technologies are key to our powertrain offensive, aimed at improving the fuel efficiency of our products. And working with a partner allows us to reduce development costs and capital investment requirements. In the end, it’s the customer who wins. These axles promise better mileage, better quality and better refinement.”

This program will consolidate the number of axles used on the Chrysler’s vehicles for greater economies of scale. Included in the program is a family of front-wheel-drive axles and a family of rear-wheel-drive axles based on proprietary ZF designs and a Chrysler-designed rear-wheel-drive axle.

“This partnership with Chrysler and the UAW further demonstrates ZF’s intention to increase market presence with axles and to use this as a foundation for future explorations with additional customers,” ZF CEO Hans-Georg Haerter said. “It gives us the opportunity to bring a key piece of ZF driveline and chassis technology to a large volume of future North American vehicles with a skilled workforce in a state-of-the-art manufacturing facility.”

The Chrysler-ZF axle-making partnership, contingent on state and local incentives, ensures the retention of Chrysler employees and anticipates a phased changeover from current Detroit Axle Plant-centered operations. The Marysville facility currently is under construction, on schedule, with a target production launch in early 2010. The 700,000 square-foot plant is expected to produce approximately 500,000 axles a year.

“This partnership will help retain a solid, long-term foundation for UAW workers employed in axle-making operations,” UAW Vice President General Holiefield said. “By partnering with ZF at the new Marysville Axle Plant, our employees may be able to take on additional work—which is good news for expanded employment opportunities.”

The creation of the Chrysler-ZF axle-making partnership will have no negative effect upon any product programs or their timing. Terms of the agreement were not disclosed.

As outlined in the Chrysler’s Recovery and Transformation Plan (RTP), partnership opportunities are critical to Chrysler’s future success. These opportunities involve new markets, new segments, new potential alliance partners and new sources for components.

Chrysler’s global strategy builds on the company’s historic strengths, including the ability to respond rapidly and creatively to emerging opportunities. Forging strategic alliances is a cornerstone of the strategy.

The axle plays a major role in the chassis system as a supporting link between wheels and vehicle body. All forces and movements between wheel and vehicle structure are transmitted via the axle. The drive axle ensures that engine motive power reaches the wheels. The front axle also transmits steering movements to the wheels.

ZF is a leading worldwide supplier of driveline and chassis technology. Headquartered in Friedrichshafen, Germany, ZF is among the 15 largest automotive suppliers in the world. The company employs approximately 58,000 at 119 locations in 25 countries, and had sales of $17.3 billion in 2007.

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