Fiat Chrysler to Spend $1 Billion to Modernize Michigan Plant
Posted January 11, 2018 11:18 p.m. EST
Fiat Chrysler Automobiles said Thursday that it planned to spend $1 billion to move production of heavy-duty pickup trucks from Mexico to a factory in Michigan, where it will add 2,500 jobs as a result.
The automaker also said it would award $2,000 bonuses to each of its 60,000 hourly and salaried employees in the United States.
“These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA’s success,” the company’s chief executive, Sergio Marchionne, said in a statement.
The automaker said both actions were “made possible in part” by the tax bill that President Donald Trump signed into law last month. Marchionne added that “it is only proper” that employees share in the savings generated by the tax bill. “We openly acknowledge the resulting improvement in U.S. business environment by investing in our industrial footprint,” he said.
The bonuses will be paid in the second quarter of 2018 in addition to any profit-sharing or performance-related bonuses.
Trump praised the actions Thursday on Twitter: “More great news as a result of historical Tax Cuts and Reform.”
Fiat Chrysler disclosed its plans to modernize the plant, in Warren, Michigan, on the eve of the North American International Auto Show in Detroit, which opens to the media and industry visitors on Sunday. Fiat Chrysler is scheduled to unveil a new light pickup truck, the Ram 1500, on Monday.
For the past two years, Fiat Chrysler has been conducting a sweeping reorganization of its U.S. manufacturing operations in a bid to produce more trucks and Jeeps in response to growing consumer demand for larger roomy vehicles and plummeting sales of compact and midsize cars.
In December, nearly 7 of every 10 new light vehicles sold was classified as a light truck. The designation includes pickups, sport-utility vehicles, minivans and delivery vans. Five years ago, the market was split 50-50 between cars and trucks.
The rapid shift has left auto manufacturers scrambling to make more trucks while cutting production at their car factories.
“There’s definitely a trend that has just obliterated the need for making cars the way automakers used to,” said Jessica Caldwell, an analyst at Edmunds.com, an auto-data website. “Fiat Chrysler is one of the early movers on this.”
This month, Fiat Chrysler is scheduled to begin making a new light-duty Ram 1500 truck at a plant in Sterling Heights, Michigan, that made sedans until it was idled two years ago. The current version of the Ram 1500 is made nearby in Warren. After production of the old Ram 1500 winds down, the Warren plant will be retooled to make two new Jeeps as well as the Ram Heavy Duty trucks, which are currently assembled in Saltillo, Mexico. Production of Ram Heavy Duty models is scheduled to begin in 2020.
The Warren plant employs 6,300 people, but some are scheduled to transfer to Sterling Heights. Those losses will be offset by the 2,500 new jobs that will be created to produce the heavy-duty trucks.
Fiat Chrysler’s announcement is the second in two days about auto-production jobs coming to the United States. On Wednesday, Toyota Motor and Mazda Motor announced Huntsville, Alabama, as the location of a new plant they intend to build jointly. That plant is expected to employ 4,000 people and begin production in 2021.
The moves to make more vehicles come as Americans are buying fewer cars and trucks. Sales of new vehicles fell 1.8 percent last year, and they are expected to suffer a steeper decline in 2018.
Other automakers are also ramping up new or expanded plants, despite the downward trend in sales. Volvo, the Swedish carmaker, is set to open a new plant in South Carolina this year. BMW and Audi are also building new plants in Mexico.