News of February 20, 2002
Chrysler Group and Magna Steyr Reach Business Agreement on Sale of Eurostar
Action will streamline costs for Chrysler Group while continuing strong operational presence in Europe
Dieter Zetsche: "This is an excellent opportunity; it enables us to reduce production costs and invest more money into aspirational products, while providing a secure future for employees"
Siegfried Wolf: "Magna and Chrysler Group have worked out an exemplary solution for the employees"
Auburn Hills, Mich./Graz, Austria - Chrysler Group and Magna Steyr today confirmed a business agreement for the sale of Chrysler Group's Eurostar operations in Graz, Austria, to Magna Steyr, a unit of Magna International Inc. The agreement is subject to Supervisory Board approvals of both companies.
"This is an excellent opportunity. The framework for our discussions with Magna focused on two key elements - it needed to make the best business sense for the future of the Chrysler Group and be in the best interest of employees," said Chrysler Group President and Chief Executive Officer Dieter Zetsche.
"The agreement does that. It enables us to reduce production costs, streamline our asset base, and make better use of existing capacity. The proceeds from this transaction and the savings from these efficiencies allow us to invest more money into developing aspirational products. At the same time, this agreement with Magna provides a secure future for the employees."
Under a separate agreement, Chrysler Voyager production will continue in Graz as part of Magna Steyr's adjacent Graz operations, which already produce a number of vehicles for DaimlerChrysler, including Jeepģ Grand Cherokee. Chrysler PT Cruiser production will move to Toluca, Mexico, to be consolidated with production of that model there.
"PT Cruiser has proven to be one of Chrysler's hottest products. It remains a strong competitor in Europe, even more so now that we've added new powertrains specifically with the European market in mind," added Zetsche. The company recently introduced two new engines, a 1.6-liter petrol and 2.2-liter diesel (developed by Mercedes-Benz), for the PT Cruiser in international markets.
"We decided on this agreement because it optimally encompasses our strategic considerations and those of our long-standing partner and customer, DaimlerChrysler," said Siegfried Wolf, President and Chief Executive Officer of Magna Steyr. "Magna and Chrysler Group have worked out an exemplary solution for the employees. The good order bank at Magna's Austrian plants enables the company to meet the needs of employees in this unique way."
As part of the agreement, approximately 800 of the nearly 2,000 employees at Eurostar will continue to produce the Chrysler Voyager in Graz. It is anticipated that the vast majority of the remaining employees will choose to enter a "trust", which will provide advanced training while they continue to receive their pay. A "trust" bridges the time between employers. Those in the "trust" will be employed by Magna Steyr, following the estimated eight-to-ten-month transition period until the start of a new project at the facility.
Eurostar was originally a joint venture to manufacture Chrysler Voyager minivans in a partnership between Chrysler Austria Ges.m.b.H (50 percent ownership) and Steyr-Daimler-Puch Fahrzeugtechnik AG (50 percent ownership) which began in October 1991. By June 1999, the 55,500 square meter facility was wholly owned by Chrysler Group. It assembles the Chrysler Voyager minivan and Chrysler PT Cruiser for markets outside North America.
The terms of the agreement are not public. The sale is expected to be formally completed this summer.
(Feb. 15, 2002)