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Derailed $300M Tijuana Auto Plant May Be Back on Track , Elsewhere

Amid reports that plans are on the skids for an auto assembly plant in Tijuana built by a Chinese manufacturer and New Jersey import firm, some observers say the project may still happen.

“The feeling is that they will come to Tijuana because this is the best place for them,” said Carlos de Orduna, chairman of the China committee for the Tijuana Economic Development Corp.

In July, executives from China America Cooperative Automotive Inc. and Zhong Xing Automobile Co., plus officials from the People’s Republic of China and Baja California, Mexico, announced a deal that would create a $300 million plant that would employ thousands of workers. Construction was set to begin this year so that the first cars would roll off the assembly line in 2009.

Yet in February, Chamco Chairman Bill Pollack said the plant would not be built elsewhere in Mexico, not in Tijuana. He also declined to provide reasons for the decision, saying that the deal “unraveled.”

But what may have unraveled is Chamco’s management team.

According to Automotive News, Chamco installed a new management team and ousted Pollack, President Sam Tropello and consultant Michael Daspin, and named Mario Ferla, a former executive at Fiat, as the new chief executive officer and Thomas Del Franco, who formerly worked for both Audi and Fiat, as president.

Calls to Chamco at its headquarters in Parsippany, N.J., were not returned.

The report also said Chamco’s new board filed a lawsuit in New Jersey against the former executives, alleging fraud, mismanagement and diversion of corporate funds.

De Orduna said the auto plant was still planned for Tijuana, and that ZX Auto, the Chinese car company, was trying to get out of its agreement with Chamco.

The former management team of Chamco never complied with the terms of the contract they signed last summer, which included making a $5 million deposit as part of an initial $100 million investment into the project, de Orduna said.


New Life

John Riley, chief executive of BC Manufacturing, a contract manufacturer in Tijuana which has a partner agreement with Chamco, said he had not heard from them, but was hoping a new team “would bring new life into the opportunity we had before.”

The Tijuana plant was trumpeted with much fanfare when announced in July. The first models to be built were a pickup truck, a sports utility vehicle, both selling for $12,500 apiece, and a mini-car with three wheels that would sell for $3,000.

Pollack said Chamco has obtained regulatory approvals from the Mexican government to build the vehicles, and that regulatory approvals to export cars and trucks into this country were under way.

If the Tijuana plant is built, it would be the first significant investment by the Chinese in the region, de Orduna said. The region already has investments from Taiwanese companies, he said.

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