Fiat Chrysler to invest $5.3 billion in US plants – Detroit Free Press
Fiat Chrysler Automobiles has made a commitment to invest $5.3 billion in its U.S. plants over the next four years as part of its new tentative agreement with the UAW. A plant shuffle sees at least three key new cars and SUVs moving to Mexico while production of popular pickups and crossovers is increased in the U.S., the Free Press has learned.
The planned investment would help the UAW secure thousands of jobs. The $5.3 billion includes $3.4 billion invested in assembly plants, $1.5 billion at engine and transmission plants, $315 million at stamping plants and $34 million at Mopar parts distribution plants.
While the U.S. commitment is large, a massive shell game of moving at least a half-dozen cars and trucks from the plants where they are currently made to new locations runs the risk of being disruptive for UAW workers and will raise a number of questions just as 39,000 workers are preparing to vote on the agreement, which was reached Tuesday.
Dave Sullivan, analyst with AutoPacific, said the moves may sound disruptive but it is a wise strategic move.
“The shell game of moving products around is a good solution to minimize downtime and keep production going, especially for high-profit, important big volume vehicles like pickup trucks,” Sullivan said.
Car production to move to Mexico
The automaker’s plans are designed to concentrate the production of cars in Mexico and trucks in the U.S. The plan is to move assembly of the Chrysler 200 mid-size car, currently built in Sterling Heights, to a plant in Mexico plant, according to a person familiar with the plan. The automaker also plans to move production of the Dodge Dart compact car, currently made in Belvidere, Ill., to Mexico.
The Belvidere plant also currently makes the Jeep Compass and Jeep Patriot. But those vehicles will be phased out in the next year according to the automaker’s five-year plan. A Jeep crossover to replace the two utility vehicles will also be made in Mexico, the person said.
The Chrysler 200 and the Dart will be built at the plant in Toluca, Mexico, according to Automotive News, which was first to report the automaker’s bold product redistribution plan earlier today.
Fiat Chrysler spokeswoman Shawn Morgan declined to comment on the report.
“Moving cars to Mexico makes sense,” said Haig Stoddard, industry analyst for WardsAuto. “It makes sense to build less profitable vehicles in Mexico and more profitable ones in the U.S. With the trend to consumers buying crossovers, demand for the 200 and the Dart will be flat at best going forward.”
Ram pickup to be built in Sterling Heights
To fill the void created by the relocation of the Chrysler 200, the automaker will move production of its popular Ram 1500 pickup from Warren Truck to Sterling Heights, the person said.
Sullivan said Fiat Chrysler has experience with plants making multiple vehicles and having a second pickup plant is key – much like Ford has two F-150 pickup plants so that when one went down to retool, the other kept building trucks to satisfy demand.
Stoddard said it is a good plan to be able to keep building the current Ram pickup in Warren while Sterling Heights is retooled for the next generation.
As previously reported, Fiat Chrysler is planning to move production of its popular Jeep Cherokee from Toledo to Belvidere, Ill. The Cherokee, Jeep’s most popular vehicle, is the only vehicle currently planned for the Belvidere plant.
FCA CEO Sergio Marchionne decided to move production of the Cherokee so he could increase production of the Jeep Wrangler in Toledo. Over the past year Marchoinne has been trying to figure out how to make more Wranglers at a plant in Toledo that has maxed out its capacity. Under the plan, the Wrangler would move from its current plant in Toledo to the adjacent plant which currently makes the Cherokee. That makes room to add production of a Wrangler pickup in Toledo.
Adding a Wrangler pickup should add volume to the Wrangler line, much like adding the four-door did, Sullivan said.
Jeep Grand Wagoneer would be built at Warren Truck
Warren Truck will produce the Jeep Grand Wagoneer, an all-new luxury three-row SUV that the automaker plans to start making in 2018, the person said. The Grand Wagoneer is a higher-end, stretched version of the Grand Cherokee, which would make it easy to use the Warren Truck plant to build additional Grand Cherokees if Jefferson North cannot keep up with demand.
Both Sullivan and Stoddard do not think quality will be hurt by all the moves.”It is a chance to review quality from the ground up, as long as they don’t hurry the changeovers or rush the ramp-up of new vehicles,” Stoddard said.
All of the specific product reallocation plans must still be approved by the automaker’s Group Executive Council, which is chaired by Marchionne.
The broad, bold plan to move the production of so many cars is likely to be unsettling for many of Fiat Chrysler’s 39,000 UAW members. Many of those members are already upset about some of the economic terms of a tentative agreement that they will be voting on over the next two to three weeks.
Autoworkers have not yet been fully briefed about the economic terms of the deal but have been expressing dissatisfaction on social media sites such as Facebook.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely.