Fiat Chrysler Automobiles plans to invest $1 billion in a suburban Detroit assembly plant that will take over production of the Ram heavy-duty pickup in 2020. The truck currently is assembled in a Mexican factory that will be “repurposed” for another global product, FCA said.
The shift to the Warren Truck Assembly Plant will result in the creation of 2,500 new U.S. jobs, according to FCA. Separately, the Euro-American automaker announced plans to pay $2,000 bonuses to 60,000 U.S. hourly and salaried employees this coming spring.
“These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA’s success,” said FCA Chief Executive Office Sergio Marchionne. “It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly.”
(FCA recalls 1.8 mil Ram pickups to fix shifter problem. Click Here for more.)
The decision to put the Ram HD pickup in Warren is the latest in a series of moves by Fiat Chrysler to enhance its truck production while cutting back on passenger car output. The automaker has retooled the nearby Sterling Heights Assembly Plant to handle the all-new 2019 Ram 1500 light-duty version of its full-size pickup. That plant previously produced the Chrysler 200 sedan which has been dropped from the line-up.
The automaker also culled the Dodge Dart sedan, converting its plant in Illinois to produce Jeeps. And it invested over $1 billion in a Toledo, Ohio plant to handle the completely redesigned 2018 Jeep Wrangler.
Some news reports have lined the decision to move the Ram HD model to Michigan to pressure from the Trump Administration. During the 2016 presidential campaign then-candidate Donald Trump frequently attacked Ford Motor Co. and other automakers for importing vehicles from Mexico, threatening to enact a “big border tax” once elected. As president, Trump has since backed away from that threat though his administration has been demanding significant revisions to the North American Free Trade Agreement and threatening to kill the pact if it doesn’t get what it wants.
(Mexican auto imports hit record in 2017 despite Trump pushback. Click Here for the story.)
Automakers and auto trade groups have actively lobbied against changes that would force them to restructure what has become a continent-wide network of assembly and component plants. David Cole, director-emeritus of the Center for Auto Safety, warned a tear-up of NAFTA could seriously disrupt the industry and substantially increase costs for car buyers.
Several sources who spoke to TheDetroitBureau.com on background, as they were not permitted to speak for FCA, explained there were other, more practical reasons why the Ram HD is being shifted to Michigan:
- High-profit pickups are less sensitive to labor costs than smaller vehicles generating lower margins, which is expected to describe the product that will replace the Ram at FCA’s Saltillo plant;
- There is a deep supplier network in Michigan set up for Ram production and by adding the HD model to the Ram 1500 already in the Detroit area it increases efficiency and lowers costs;
- Beyond lower labor costs, Mexico has negotiated an array of global free trade agreements that would better fit production of a vehicle that will be sold worldwide. The Ram HD is largely sold in the U.S., so it never really benefited from any free trade agreement but for NAFTA.
(Chevrolet set to debut all-new Silverado pickup at Detroit Auto Show. Click Here for a preview.
Pickup sales have been mushrooming over the last few years, as has demand for SUVs and crossovers. The three best-selling vehicles in the U.S. in 2017 were, in order, the Ford F-Series, the Chevrolet Silverado and the Ram pickup. FCA is hoping that new versions of the Ram will help it close the gap with its two key competitors. It invested $1.5 billion in the Sterling Heights plant to prepare for the half-ton model.
The all-new 2019 Ram 1500 will make its debut at the North American International Auto Show in Detroit next Monday.