FIVE YEARS LATER, CHRYSLER’S GAMBLE ON RAM TRUCKS IS PAYING OFF

Original Story: NYTimes.com

WARREN, Mich. — In December, the sprawling, four million-square-foot factory here where workers assemble Ram pickup trucks, along conveyors that weave for more than 30 miles, suddenly went quiet.

Thousands of workers looked on where a makeshift stage, draped in black, had been assembled. Sergio Marchionne, Chrysler Group’s chairman and chief executive, stepped up to address the crowd.

In the dark days of Chrysler’s bankruptcy — when the company barely escaped extinction thanks to a taxpayer bailout and the purchase by Mr. Marchionne’s Fiat of a major stake, which later turned into ownership — such a staged display and work stoppage could have meant trouble. But not this time.

Mr. Marchionne was there to acknowledge an industry award for the truck, but, more important, to convey a simple message to the workers: well done.

“Today I wanted to come to Warren to personally thank all of you,” he said, and in his signature style joked about the criticism that followed his decision in 2009 to create the stand-alone Ram division. “The skeptics, who were already predicting our company was going down the tubes, thought for sure that we’d been smoking something funny.”

In 2009, when Ram was carved out from Dodge into a stand-alone division, it was a big gamble — and far from a sure thing. Some industry critics scoffed at the idea of a brand dedicated to pickup trucks. Others were puzzled: After the bailouts, the trend was to consolidate brands to streamline automakers’ offerings, but Chrysler was adding a new one.

Five years later, the verdict is in: The gamble paid off. Ram trucks have captured an ever-greater share of the full-size pickup market dominated in the past by General Motors and Ford, and are on track to seize even more. By adding innovative features not found in other pickups, and aggressive pricing to lure truck buyers, who are among the most loyal in the automotive business, Chrysler’s Ram has managed to go from also-ran to a threat in only a few years.

Here in Warren, the plant is now churning out Ram pickups 20 hours a day, six days a week, with occasional Sundays — barely able to keep up with demand.

In the fourth quarter of 2009, when the new Ram division’s trucks were hitting the streets, the company eked out a paltry 11 percent of the market share for full-size trucks. The two other Detroit automakers were lapping Chrysler around the track, with shares of 42 percent for G.M. and 37 percent for Ford. Since then Ram has conquered more and more of the market every year. In August, when sales surged 33 percent over a year earlier, Ram commanded 21 percent of full-size pickup purchases in the United States.

Most of that success has come at the expense of G.M.’s Chevrolet Silverado pickup, which despite its own recent redesign has lost market share this year. Ford’s F-Series pickups remain the overall market leader, but their sales have also dipped this summer as the automaker prepares to introduce a new generation of trucks made with an aluminum body.

Reid Bigland, Chrysler’s head of United States sales and head of the Ram division from April 2013 to last month, said that what made the new division different was an intense focus on pickups, which under the Dodge umbrella and its muscle-car heritage had never quite received their due.

“Selling trucks is just a different business than cars,” Mr. Bigland said, “and we had a group of people who could come to work and do nothing but think about pickup trucks.”

One result was features competitors did not have, like air suspensions, cargo cameras, eight-speed transmissions and, last year, a diesel engine that gets 28 miles a gallon on the highway.

On the factory floor itself, new, lean manufacturing methods transplanted from Fiat began revolutionizing the Warren plant’s operations — not only creating more efficient ways of building vehicles and increasing quality but also giving workers a stake in decision-making.

“The floor has a voice now,” said Tracie Fern, a Warren worker who helps find ways to make jobs on the assembly line more efficient. “When someone has a suggestion, they listen to us.”

Go back to the 1980s, and the Dodge Ram was not even an also-ran. “It was just a blip on the radar back then,” said Karl Brauer, senior analyst with Kelley Blue Book. “Ford and Chevy didn’t think about, or care about, what Ram was doing.”

The first real attention-grabber was the 1994 Ram, which featured the aggressive, curved “big rig” look the Ram still incorporates today. But while the muscular design change drew attention and increased sales, the truck languished in a distant third.

When the stand-alone experiment began in 2009, the near-death experience of the bankruptcy and taxpayer bailout had left its mark on Chrysler. Ram executives said they knew they would have to deliver results, and quickly.

“You either come out swinging or you roll over,” said Robert Hegbloom, a Ram executive who last month became head of the brand. (Mr. Bigland was tapped to lead Fiat’s Alfa Romeo unit in North America.)

A conference room in the basement of Chrysler’s headquarters was turned into a makeshift “Ram war room.” The new team members gathered regularly to brainstorm ideas, figure out ways for the trucks to distinguish themselves, and perhaps most important, zero in on what truck buyers wanted.

Mr. Marchionne, well known for his blunt style and attention to detail, held monthly meetings with the Ram executives, where he expected updates.

For light-duty pickups, the team decided to hone in on a priority they were hearing from truck customers. “It was all about fuel economy,” Mr. Hegbloom said, explaining that buyers used to willingly sacrifice gas mileage for hauling capability. Now they wanted both.

Ram engineers went to work, and by adding a host of features — shutters that close the front grille at high speeds to reduce drag, an eight-speed transmission and ultimately a new turbodiesel engine — they managed to increase the trucks’ hauling performance while also topping the charts on fuel economy.

Designers also focused on upgrading the interiors. That was because the nature of pickup trucks was changing. A pickup used to be a bare-bones affair: Bench seats were common, back seats generally nonexistent. Now, so-called crew cabs are ubiquitous, and the comfort and technology match those of any sport utility vehicle.

“They’re really a lot like luxury vehicles these days,” said Jessica Caldwell, senior analyst with Edmunds.com.

Jeff Jagoda, a fourth-generation autoworker, now at the Ram factory in Warren, has seen the evolution firsthand. He bought his first truck in 1975, and with its crank windows, bench seat and exposed steel inside, he said the last word to describe it would be luxury. “When I brought it home my mother said: ‘What are you doing with this thing? You’re not a farmer,’ ” he said. “But that’s what trucks used to be, something people bought to get work done, nothing more. Today, they’re something else entirely; you’ve got all the comforts of home if you want.”

Sean Kilmain, who lives on Cape Cod in Massachusetts, bought his new Ram 1500 in July after test-driving Ford and G.M. trucks. He said he wanted something that could be comfortable for family skiing trips to Vermont but also capable of towing his boat or hauling gear.

“When you’re looking to take two dogs and your nephews along for the ride, space becomes an issue,” Mr. Kilmain said. “This will be the truck that we take places.” What sold him on the Ram, he said, was that he felt the truck offered more features for less money than the competition, and that the fuel economy was also impressive.

“I didn’t want to get a gas guzzler, but also wanted something that could do pretty much anything I wanted,” he said. “Haul some stuff, carry some people.”

Mr. Brauer, the Kelley Blue Book analyst, predicted that Ram might give G.M. a run for its money, and could possibly seize the No. 2 spot in coming years — something that would have been unthinkable a decade ago.

“Ford is just a monster in the pickup category, and always will be. But what we could see is a Ford main show, with G.M. and Ram left to fight it out,” he said. “If that’s the case, then Ram is winning.”

Battery Explosion Causes Injuries

Story first appeared in USA Today.

WARREN — Two employees were injured Wednesday in a lithium battery explosion that forced the evacuation of about 80 others at a General Motors Co. facility north of Detroit, authorities said.  This caused an influx of workers compensation insurance quotes to be processed.

The explosion occurred during extreme testing of an experimental battery in a test chamber at the Alternative Energy Center laboratory at the GM Tech Center in Warren, the automaker said in a statement.

It also caused a small fire that was quickly extinguished.  Chemical gases from the battery cells were released and ignited in the enclosed chamber. The battery itself was intact.

The Tech Center, a sprawling 1950s-era campus, is home to the battery laboratory for the Chevrolet Volt electric car. The battery being tested had no connection with the Chevrolet Volt or any other GM production vehicle, according to the automaker.

The Edmunds.com Senior Analyst said Wednesday's explosion could resurrect debate surrounding an investigation into the Chevy Volt and fires.

Sales of the electric car slowed last year after fires broke out in three of the cars' batteries several days after safety crash-testing. The National Highway Traffic Safety Administration launched an investigation, but closed it after determining that the car was no more risky than vehicles with conventional gasoline engines.

While this incident deserves some scrutiny the fact is that this is the reason why new car technology undergoes rigorous testing, to try to ensure that episodes like this don't happen on the road.

On Wednesday, dispatchers received calls about the explosion at 8:46 a.m. and firefighters arrived five minutes later, Warren Fire Chief Dave Frederick said.  They reported light smoke ... and some small amount of fire.  It was confined to the room of the explosion.

One worker was taken to an area hospital, while the second was treated at the scene. The extent of their injuries was not immediately known. Four other employees also were evaluated by medical personnel at the scene, GM said.

A hazardous materials team was called in to monitor the air quality at the facility, Frederick added.

For more local and Michigan business related news, visit the Michigan Business News blog.

Warren And Ann Arbor: A Tale Of Two Economies

Separated by 50 Miles but Worlds Apart, Michigan Cities Embody the State's Ailing Industrial Core and a Potential Road to Rebirth
Story from the Wall Street Journal

Michigan's economy is the worst in the country, dragged down by its dependency on an ailing auto industry. But in a lab at Accio Energy in Ann Arbor, engineers Dawn White and David Carmein are driving in a different direction.

They have built what they call an "aerovoltaic" device, a two-inch loop of piping that generates electricity -- without moving blades or turbines -- when air flows through it. The engineers' next step: linking a series of these loops into screens that they see eventually generating wind electricity where windmills are too big, dangerous or noisy to go.

Innovative companies like Accio are common in Ann Arbor, home to the University of Michigan, where a highly educated population has created a burgeoning economy, and a street-corner conversation can develop into a company and create jobs.

Michigan's economic future rests on making the state look more like Ann Arbor, and less like Warren, 50 miles to the northeast, where factory buildings and warehouses built on the riches of the Big Three auto makers bear signs saying they are "priced to sell." The latest blow came earlier this month, when Chrysler LLC shut down its two plants in Warren as part of its bankruptcy filing.

It won't be easy. Much of the Michigan economy has been shackled to Chrysler, Ford Motor Co. and General Motors Corp. Yet even after years of watching the auto industry decline, the state has struggled to free itself from dependence on the Big Three.

"The old economy made Michigan rich and it made its work force get wages and benefits that were beyond anybody's dream," says Donald Grimes, a University of Michigan economist who paid his way through college in the 1970s by working summers at Ford and GM plants. "There is absolutely nothing that is going to replace those jobs."

The divide between Ann Arbor, with a population of 116,000, and Warren, population 126,000, is large and widening. Ann Arbor's unemployment rate of 8.5% in March trailed the nationwide rate of 9% and was well below Michigan's overall rate of 13.4%, based on nonseasonally adjusted figures. By contrast, Warren's unemployment rate of 17.3% is among the highest in the state. The average family income in Ann Arbor was $106,599 in 2007, compared with $69,193 nationally and $60,813 in Warren.

That economic gulf wasn't always there. In 1979, the average family in Warren made $28,538 annually, not much below Ann Arbor's average of $29,840. But in the past 30 years, the U.S. economy has undergone a sweeping transformation that has benefited cities like Ann Arbor and hurt manufacturing hubs like Warren.

As transportation and communication costs fell, and countries like Japan and, now, China, increased their manufacturing capability, Michigan's advantages have faded. Those same forces of globalization benefited educated workers -- an area where Michigan largely fell short.

Except in Ann Arbor.

Over the years, the city developed the types of schools, cultural institutions and amenities that made it an attractive place to live and work. Google, whose co-founder Larry Page attended the University of Michigan, opened an Ann Arbor campus in 2006. About 70,000 people commute to this city, about 40 miles west of Detroit, each day.

Accio Energy got its start in 2007, based on plans two of the founders hatched at Zingerman's Deli, Ann Arbor's renowned gourmet-food destination.

Accio got some of the seed money for the three-person start-up from Mary Campbell, an area venture capitalist who met Ms. White in a running group. Jeffrey Basch, a former General Electric automotive development worker, is Accio's general manager. Ms. White met him while helping shuck corn at an organic produce company that Mr. Basch's wife, another former Ford engineer, started and Ms. White helped fund.

In Warren, which has the largest concentration of auto workers in the country, job transitions are more difficult to make. Just one in five of Warren's workers between the ages of 25 and 64 holds a bachelor's degree or higher, a relic of the days when a college degree wasn't necessary to find a job that paid well. By comparison, three-quarters of Ann Arbor's work force has at least a college degree.

"I got out of high school and went right into it," says Arthur Kupiec of the Chrysler job he started in 1972, when he was 18. "Back then, jobs were all around and the economy was booming."

Mr. Kupiec worked at Chrysler's truck plant in Warren until last year, when he took an early retirement package. "Believe me, I didn't want to leave, but I said, 'You know what, I have to get something while I have something,' " he says. "I'm only 55 years old, and I'm just at home putzing around."

Ann Arbor's burgeoning start-up culture hasn't fully shielded it from the economic downturn. The city's shops and restaurants are a weekend destination for many in Michigan, but with the state in trouble, they have seen business drop.

And despite Ann Arbor's educated work force, employers here find Michigan's reputation as a failing manufacturing economy can deter potential hires from moving to the state.

At HandyLab, an Ann Arbor firm that makes a DNA-analysis device, Chief Executive Jeffrey Williams says he has had a hard time finding Ph.D.-level workers with highly specialized skills. His company, which has doubled to roughly 60 employees in the past year, has 10 job openings.

"It's definitely gotten much harder with all the stigma around Detroit," he says. "Somebody tries to pigeonhole us as Detroit, we say, 'No, it's Ann Arbor, it's a completely different environment.' "

In another blow to Ann Arbor, Pfizer Inc. in 2007 announced that it was closing its research facilities in the city, where 2,100 people worked. But unlike idled auto workers, who often find there is no market for the manufacturing skills they have honed over the years, Pfizer's researchers generally found work elsewhere.

While some of America's once-dominant industrial centers, including Pittsburgh and, a generation earlier, New York City, have been able to make the transition away from a manufacturing-dependent economy, others, such as Cleveland and Buffalo, have floundered. Warren, for its part, does have well-trained engineers and designers -- GM's technical center is there -- and Wayne State University is building an advanced technology education center in Warren. Web design, internet marketing, and Michigan SEO companies thrive in a strong tech sector.

Meanwhile, with the automotive industry's latest troubles, more people in Michigan are breaking with the past and coming to see a college education as an economic necessity.

Treashure Banks, 20, is studying business at Macomb Community College and working at the school part time. She still isn't sure what sort of company she wants to work for, but there is one thing the Detroit native has always been clear on when contemplating her future career.

"It was never automotive, never," she says. "We need to have some new ideas. We need something new."