DETROIT—Fiat Chrysler announced a $4.5 billion investment plan on Feb. 26, it said would increase its workforce in Detroit and the surrounding suburbs by about 6,500 jobs to build all-new or next-generation SUVs, in a move touted by officials as an uncommon opportunity to revive the regional economy.
Under the plan, the company said it would reopen a shuttered engine plant in the city and convert another in the same complex into a future assembly plant for the Jeep Grand Cherokee and a new, three-row, full-size Jeep SUV and plug-in hybrid models for all.
The Motor City was once home to about a dozen massive auto production plants, but a rash of closures helped to push Detroit’s unemployment rate to a peak of almost 29 percent a decade ago. The new Chrysler plant would be the first to be built in Detroit since 1991 and is expected to add 3,850 jobs. The company said in a news release that it would add another 1,100 new jobs at its Jefferson North Assembly plant in Detroit, and roughly 1,500 new jobs at facilities in the neighboring suburb of Warren. The investment would roughly double FCA’s hourly workforce in the city.
Investing in our future – FCA announces plans to expand production capacity in five existing Michigan facilities and to build a new plant in Detroit to meet the growing demand for @Jeep® and @RamTrucks. The Company will invest $4.5B and create 6.5K jobs: https://t.co/LtUT8Tswpx pic.twitter.com/GCl5Wodzsy
— FCA-North America (@FiatChrysler_NA) February 26, 2019
Speaking at a news conference after the announcement, Detroit Mayor Mike Duggan called the deal a “once in a generational chance to change the economic” fortunes of Detroit. Gov. Gretchen Whitmer said it has been a long time since Michigan has seen an automotive investment as “big and transformative” as Fiat Chrysler’s plan.
Fiat Chrysler’s investment in the Detroit area will have a ripple effect, boosting the automotive industry and helping other non-auto businesses in Michigan and other Midwest states, Whitmer said.
Company officials say SUVs remain in demand, with strong sales and growth potential both domestically and in some overseas markets, such as the Middle East. The company’s chief financial officer told investors in June that trucks and SUVs would account for 80 percent of revenue by 2022.
Fiat Chrysler said the additional investments are subject to tax incentive packages it was working out with the city and state of Michigan. The automaker would need about 200 acres of land for the project, most owned by the city, Great Lakes Water Authority, DTE Energy and the Moroun family, which owns significant amounts of city real estate and the Ambassador Bridge that connects Michigan to Ontario, Canada.
City officials signed a memorandum of understanding with the automaker, and they were ironing out a deal to assemble land for the project over the next 60 days.
If enough land is acquired and the tax incentives approved, construction is expected to start later this year and the first new vehicles could be in production by the end of 2020.
By Jeff Karoub