Auburn Hills’ FCA has announced it plans to invest $4.5 billion in five of its existing Michigan plants and to build a new assembly plant in Detroit. The move would increase capacity to meet growing demand for Jeep and Ram brands, as well as electrified models. The projects are expected to create nearly 6,500 jobs.
The deal is predicated on a memorandum of understanding the automaker signed with the City of Detroit, in which the city will demonstrate within 60 days that is has obtained binding agreements to deliver title to property needed to build an expansion next to the Mack Avenue Engine Plant as well as conditions required to construct a new assembly plant and other facilities.
In addition, the city must begin the Community Benefits Ordinance process in the neighborhood to engage with the community, identify community benefits, and address potential development impacts. The benefits and impacts would be included in a final development agreement to be approved by the Detroit City Council.
It also is expected that the city and the state would deliver an incentive package that would support the business case for the investment.
The announcement aligns with FCA’s manufacturing realignment that began in 2016 as consumer demand shifted toward SUVs and trucks. The company discontinued compact car production and retooled plants in Michigan, Illinois, and Ohio.
“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,” says Mike Manley, CEO of FCA. “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.”
FCA would invest $1.6 billion to convert the two plants that comprise the Mack Avenue Engine Complex in Detroit into the assembly site for the next-generation Jeep Grand Cherokee, as well as an all-new, three-row, full-size Jeep SUV and plug-in hybrid models. It will add 3,850 jobs to support production. The company plans to start construction by July, and the first three-row vehicles are expected to roll off the line by the end of 2020. The all-new Grand Cherokee is expected to be ready in the first half of 2021.
The Jefferson North Assembly Plant in Detroit would receive an investment of $900 million to retool and modernize the facility to build the Dodge Durango and next-generation Jeep Grand Cherokee. FCA expects to create 1,100 new jobs at the plant.
The reborn Mack facility would be the first new assembly plant to be built in the city of Detroit since 1991 when Jefferson North was built. When complete, Mack would join Jefferson North as the only automotive assembly plants to be located completely within city limits.
“This opportunity is unlike anything we have seen in decades, and it’s going to be crucial that we come together in the interest of our city and our residents over the next 60 days to bring nearly 5,000 new good-paying jobs to this neighborhood,” says Detroit Mayor Mike Duggan. “Over the next two months, we will be out in the neighborhoods every day working with the residents to make this happen for our city. Most importantly, we’re going to bring these 5,000 jobs to Detroit without displacing a single resident.”
The 3.6-, 3.2-, and 3.0-liter Pentastar engines currently built at Mack would be relocated to the Dundee Engine Plant in Dundee as part of a $119-million investment. Pentastar production at this plant would end by the third quarter. Meanwhile, the Mack II in Detroit has been idle since it ceased production of the 3.7-liter V-6 in September 2012.
FCA has also confirmed the investment at Warren Truck to retool for production of the all-new Jeep Wagoneer and Grand Wagoneer, which was announced in 2017, along with their electrified counterparts, would increase to $1.5 billion. Production is expected to launch in early 2021. The plant would continue building the Ram 1500 Classic, which is being extended to meet market demand. It is expected that 1,400 jobs would be added. As a result of the investment announcement, production of the all-new Ram Heavy Duty will continue at its current location in Mexico.
To support the additional production, the company’s Warren Stamping Plant in Warren and Sterling Stamping Plant in Sterling Heights would receive investments of $245 million and $160 million, respectively. Sterling Stamping is expected to add more than 80 new jobs.
Over the past two years, FCA has realigned production at four plants in Illinois, Ohio, and Michigan to increase capacity for the Jeep Cherokee, Jeep Wrangler, and Ram 1500 light-duty truck. It also created additional manufacturing capacity for the Jeep Gladiator in Ohio.
In total, FCA has committed to invest nearly $14.5 billion in its U.S. manufacturing operations, creating nearly 30,000 jobs since June 2009.