Detroit will get a Jeep factory, the Motor City’s first new auto assembly plant in a generation, as part of a $4.5 billion manufacturing expansion in southeast Michigan by Fiat Chrysler that will mean nearly new 6,500 jobs, the company announced Tuesday.
FCA said it would convert the Mack Avenue Engine factory to an assembly plant for the next-generation Jeep Grand Cherokee and a new, large Jeep SUV. In all, the company said it will add production at five factories in metro Detroit.
“This is the way the city of Detroit fights unemployment and poverty,” Mayor Mike Duggan said of the Mack Avenue assembly plant. “Standing here today, to be back in the city of Detroit, is truly remarkable.”
Market economist Jon Gabrielsen, who consults in the auto industry, called the plan “an absolutely huge commitment on the part of FCA; $4.5 billion is over half of FCA’s average annual global capital investment being spent in just one city.”
Gov. Gretchen Whitmer concurred, noting that the economic impact was broad.
“It’s much bigger than the city of Detroit,” she told the Free Press as FCA prepared to make the announcement public. “A lot of people in our state will have job opportunities.”
Whitmer said the plans are expected to bring about 5,000 jobs to Detroit and another 1,500 to Macomb County.
FCA Chief Executive Officer Mike Manley told reporters the investment will grow core brands and electrify Jeep vehicles. He said the company is making a strong play for the large and rapidly growing market seeking three-row SUVs, which is currently dominated by General Motors with its Tahoe, Yukon and Escalade.
“Economic indicators, as we see them, are strong,” Manley said, explaining that the company is diversifying products to capture new customers and strengthen already-strong set Jeep and Ram products.
‘All new jobs’
The company outlined its plans in detail:
- The $1.6 billion investment would convert Mack Avenue Engine Complex into manufacturing site for next-generation Jeep Grand Cherokee and a new three-row full-size Jeep SUV, creating 3,850 new jobs.
- A $900 million investment at Jefferson North Assembly Plant to retool and modernize the factory for continued production of the Dodge Durango and next-generation Jeep Grand Cherokee, with 1,100 new jobs expected.
- A Warren Truck investment announced in 2017 increases to $1.5 billion for production of the new Jeep Wagoneer and Grand Wagoneer as well as continued assembly of Ram 1500 Classic with addition of 1,400 new jobs.
- As a result of this investment announcement, production of the new Ram Heavy Duty will continue at its current location in Saltillo, Mexico. FCA had said it would move that production from Mexico to Warren.
All three metro Detroit assembly sites will also produce plug-in hybrid versions of their respective Jeep models with flexibility to build fully electric models in the future, the company said in its news release.
- Sterling Stamping and Warren Stamping plants to receive more than $400 million total investment to support additional production, potentially creating about 80 new jobs at Sterling.
- $119 million investment to relocate Pentastar engine production currently at Mack I to the Dundee Engine Plant; production at Mack would end by third quarter of 2019.
“These are all new jobs,” Shawn Morgan, FCA spokeswoman, told the Free Press, when asked if any of the 6,500 jobs count existing employees.
Reuters reported later in the day that the carmaker will cut nearly 1,400 jobs at the Belvidere, Illinois, assembly plant where it builds the Jeep Cherokee.
UAW Vice President Cindy Estrada said the expansion rewards U.S. autoworkers for their hard work and shows confidence in their commitment to the future.
“This is especially exciting given that these are good union jobs with union wages and benefits that have been collectively bargained for with the company,” she said. “We also look forward to collaborating with FCA, the City of Detroit and other community leaders on a Community Benefits Agreement that reimagines our city and empowers our citizens to create sustainable communities with long term viability.”
Natalie Farquhar, who has spent 24 years working at FCA, praised news of the expansion while taking a lunch break at the FCA warehouse in Center Line.
“It makes me feel really good. I’m very happy. To me, it’s about creating good jobs that people can have for 30 years and support families. That’s what I’m all about,” she said. “I’m so glad to know it’s in the Detroit area. My only hope, because they still have many temporary workers, and they have not yet hired them permanently, I want to see people get permanent union positions.”
Farquhar belongs to UAW Local 1248 and drives a 2015 Jeep Renegade, while her husband drives a 2018 Ram 1500. Jeep and Ram? “Those are our best products,” she said.
Projects are contingent on land acquisition and the negotiation of development incentives with the cities of Detroit, Sterling Heights, Warren, Dundee and state of Michigan, FCA said.
Mark Stewart, the company’s chief operating officer, said FCA’s goal is to “strengthen our commitment to the community” while it expands production.
Duggan said the city will work to assemble 200 acres of land at St. Jean and Mack that FCA needs for parking and other use.
Detroit has 60 days to deliver on commitments outlined in a Memorandum of Understanding related to Mack and Jefferson North projects.
“One of the things we have is a good relationship with the city in terms of investments, refurbishments,” Manley said. “We’ve enjoyed that relationship in terms of working together.”
Asked about the contrast with GM, which is making cuts and idling plants, Manley said GM appears to be realigning its production capacity — ”more of a reflection of the segments they’re exiting than segments they’re going into.” GM is trimming its sedan lineup, a move led by FCA two years ago.
This move, Manley made clear, is all about expansion and harnessing what the company sees as untapped opportunity, domestically and worldwide. He said the Jeep Grand Cherokee is exported today and product exports will continue.
The Middle East, in particular, has voiced interest in the three-row design, he said.
“As you know, that segment today does not have a huge number of competitors,” Manley said. “We should be very competitive.”
Jeep Grand Cherokee is a flagship model and the company will continue investing in the popular vehicle to be certain it remains competitive, Manley said. But he emphasized that FCA plans to invest in multiple products and expand its dominance rather than look to a single popular product.
“As the market develops … we will be prepared,” he said, relating to consumer adoption of electrification and driverless vehicles.
This latest news brings U.S. investments to nearly $14.5 billion since 2009 for the Auburn Hills-based company with global headquarters in Europe.
This latest development is the next step in bringing to life a U.S. industrialization plan unveiled in 2016 to expand Jeep and Ram brands.
This major news includes production of two new Jeep-branded “white space products” as well as electrified vehicles. Manley talked of his goal to build on strong products that only seem to get stronger with time, as sales continue to grow.
“We want the city to deliver on the commitments they’ve outlined in 60 days that will allow us to keep that timeline,” he said.
All in on SUVs and trucks
In response to a shift in consumer demand toward SUVs and trucks, FCA discontinued compact car production and retooled plants in Illinois, Ohio and Michigan to make full use of available capacity to expand the Jeep and Ram brands, the company noted. The changes were tied directly to the recent launches of the award-winning Jeep Wrangler and Ram 1500, plus the introduction of the Jeep Gladiator.
“Three years ago, FCA set a course to grow our profitability based on the strength of the Jeep and Ram brands by realigning our U.S. manufacturing operations,” Manley said.
“Today’s announcement represents the next step in that strategy. It allows Jeep to enter two white space segments that offer significant margin opportunities and will enable new electrified Jeep products, including at least four plug-in hybrid vehicles and the flexibility to produce fully battery electric vehicles,” said Manley, who became CEO in July after the unexpected death of Sergio Marchionne.