Fiat Chrysler to invest $1.49 billion in Sterling Heights plant – Detroit Free Press
Fiat Chrysler Automobiles plans to spend $1.49 billion to retool its Sterling Heights Assembly Plant so it can build the next-generation Ram 1500 pickup truck there after it stops producing the Chrysler 200.
The investment plans were disclosed today in Lansing when the Michigan Strategic Fund board approved a tax break valued at $11.38 million over a 15-year period to help secure the automaker’s commitment. The board unanimously approved the request after about a 15 minutes discussion.
The automaker’s decision to move the Ram to the Sterling Heights plant likely secures its future and thousands of jobs there for years to come. FCA could have moved production to any number of locations in North America.
“This one is going to be an incredible investment,” said Mark Hackel, Macomb County executive, who noted that the plant was on FCA’s closure list back in 2009 when the automaker was going through Chapter 11 bankruptcy.
FCA said earlier this year it planned to cease production of the Chrysler 200 and move production of its Ram 1500 pickup from Warren Truck to Sterling Heights, but the size of investment and the time frame was not revealed until today.
“This is now the largest one-time corporate investment in the City’s history, and once again validates Sterling Heights as an epicenter of economic development activity in the Metro Detroit region,” Sterling Heights Mayor Michael Taylor said in a statement.
Staff members of the Michigan Economic Development Corp. recommended approval of the tax break because the automaker could have moved production of the Ram to another state or country.
Indeed, the automaker has decided that it will build the replacement for its Jeep Compass and Jeep Patriot at a plant in Mexico after production ends in Belvidere, Ill.
“The planned investment to re-tool and re-configure the existing assembly plant is so large, FCA US LLC could construct a new facility anywhere in the North American region at the same cost,” Marcia Gebarowski, MEDC’s senior development finance manager said in a memo to the Michigan Strategic Fund Board.
Earlier this month, FCA indefinitely laid off about 1,300 workers at the Sterling Heights plant.
“It is expected that production of the Chrysler 200 will cease at the end of 2016. If a new product is not committed at the Sterling Heights facility, the remaining shift would also face indefinite layoff.”
Christine Estereicher, senior manager of state relations, said the company conducted studies over several months before deciding to move the Ram pickup to Sterling Heights. The company also considered moving the Ram to plants in Toledo, Ohio and Belvidere, Illinois.
Work on the plant is expected begin later this year and should be completed by 2018, she said. Production of the next-generation Ram 1500 is expected to begin in 2018.
FCA’s plans to move the next-generation Ram 1500 from Warren to Sterling Heights are part of a sweeping plan affecting at least five assembly plants in North America to shift production of some smaller vehicles to Mexico while concentrating on the production of more profitable Jeep SUVs and Ram pickups in the U.S.
FCA CEO Sergio Marchionne said in April that the automaker plans to replace the Ram 1500 at its Warren plant with the Jeep Wagoneer — a large SUV the automaker also plans to launch in 2018. However, FCA said in its statement today that its plans for the future of Warren Truck Assembly Plant will be announced at a later date.
The automaker also plans to move its Jeep Cherokee from Toledo to its plant in Belvidere, Ill. so it can boost production of the Jeep Wrangler in Toledo and launch a Jeep Wrangler pickup. Last month FCA said it plans to spend $1 billion to retool its plants in Toledo, Ohio, and Belvidere, Ill. and create 1,000 new jobs as it retools two plants to prepare for production of the next generation Wrangler and Cherokee.
FCA brings its total U.S. investment and planned investment to more than $8.3 billion since June 2009 when Chrysler emerged from Chapter 11 bankruptcy with Fiat as its controlling shareholder.
The decision to move the Ram to Sterling Heights gives that plant, which opened in 1953 to build jet engines, yet another lifeline. In 2009, it was on the list of plants Chrysler planned to close as part of its bankruptcy reorganization. Instead of closing the plant, FCA spent about $1 billion to retool to build the midsize Chrysler 200.
The Chrysler 200, while never viewed as perfect, was heralded as FCA’s first competitive midsize sedan in years, and its design was initially praised by industry observers.
The 200 was launched at a time when American consumers were increasingly choosing midsize SUVs and crossovers and the automaker had a hard time selling the sedan without big incentives. In January, Marchionne announced the automaker would stop producing the 200.
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