NEW YORK: Fiat Chrysler announced plans for $4.5 billion in new US investment to upgrade five plants and build the first new assembly plant in Detroit in almost three decades.
The announcement — a bet on strong US demand for larger vehicles for the foreseeable future — gives a positive jolt to the Midwestern state of Michigan, the traditional base of the American auto industry.
The existing plants, all also located within Michigan, will be enhanced to boost output of popular Jeep and Ram trucks, as well as to manufacture electric vehicles and two new autos under the Jeep brand, the company said.
Michigan has been the recipient of plenty of hard knocks over the years as automakers have shifted more manufacturing capacity overseas and to the southern United States, where labour unions are weak.
On Tuesday, FCA separately said it was cutting more than 1,000 jobs in the state of Illinois.
State and local officials in Michigan hailed the announcement, a centrepiece of which is the conversion of FCA’s Mack engine plant in Detroit into an assembly plant with 3,850 new jobs to build trucks, SUVs and plug-in hybrid vehicles.
The automaker will also boost investment into its Jefferson North factory in Detroit, adding another 1,100 jobs.
The two city projects will comprise the only automotive assembly plants in the city of Detroit, FCA said.
However, the Detroit expansion will require about 200 acres of additional land. The city of Detroit signed a memorandum of understanding with FCA to reach agreements within 60 days to reach agreements to purchase the land.
The MoU also requires the city to complete city tax abatements for the auto company, expected to be worth $12 million over the next 12 years.
The state of Michigan also has made separate commitments to FCA, according to a summary MoU released by the city.
“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 neighbourhood,” said Detroit Mayor Mike Duggan.
“Over the next two months, we will be out in the neighbourhoods 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.”
General Motors last year announced it would shutter five North American plants in a cost-cutting push, including two in Michigan. Ford is also preparing a restructuring plan that could involve deep layoffs. — AFP
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