Local parts makers praise FCA plans in Michigan
Building in Michigan may have spinoff benefits for area companies, experts say
While industry experts on this side of the border hail Fiat Chrysler’s $4.5-billion investment in Michigan as great news locally, no one knows exactly what the economic spinoff will be for Canadian parts suppliers.
“We will definitely benefit and I’d love to have that number but it’s just too early,” said Stephen MacKenzie, CEO of the WindsorEssex Economic Development Corporation. “It’s terrific news and definitely a shot in the arm.” Fiat Chrysler Automobiles announced plans Tuesday to establish a new assembly plant and revive an idled engine plant as part of a massive investment that will affect five Michigan plants in all and create 6,500 new jobs in Metro Detroit. FCA said production will focus on the next-generation Jeep Grand Cherokee, including a plugin hybrid.
“What you’re going to see is a strengthening of our supply chain,” said Jonathon Azzopardi, president of the Canadian Association of Mold Makers and CEO of Laval Tool. “We already have a great relationship with FCA. It’s very early in the process, but there’s definitely opportunity.” Azzopardi pointed to a known industry standard where automakers prefer suppliers within a 50mile radius of an assembly plant. “Those within the first 50 miles get direct, positive impact as a Tier I supplier,” Azzopardi said. “We’re inside that radius and even the next radius which is 250 miles for Tier II and III suppliers, we’re inside that circle too.” MacKenzie described a “bi-national region with Windsor-Essex and Detroit where the supply chain is very integrated.”
He said there are parts of the Pacifica that cross the border seven times before they’re actually installed on a vehicle here in Windsor.
“So is Detroit’s gain Windsor’s loss? I’m happy to say it’s not,” MacKenzie said. “We’ve reached out to industry and they’re very positive. We have a number of companies who have a good relationship with Fiat Chrysler.” Mike Bilton, a manager with a local automotive components company and a member of the board of directors for the Automotive Parts Manufacturers Association called FCA’s announcement “fantastic news” for Windsor-Essex suppliers.
“When I heard the news, I started to get tingles, locally, for our region and this hub, it’s great news and the timing couldn’t be better with a new bridge going in,” Bilton said.
Experts warn the tariffs on steel and aluminum that currently impede business between the two countries could curtail the spinoff effects of the Michigan investment. “They’re picking suppliers for the next product now,” Azzopardi said. “With the uncertainty of tariffs and the USMCA, they’re going to pick other suppliers. We may miss an opportunity or we may not see the opportunity for another five years.” MacKenzie agreed that tariffs could have a negative effect. He’d like to see the United States-Mexico-Canada trade agreement ratified by lawmakers in all three countries in hopes that would trigger removal of the tariffs. “Until they’re off, they’re on,” MacKenzie said. “It affects costs today, it affects pricing today, it affects quoting today.”
A number of Windsor-Essex companies already supply parts to FCA, including Flex N Gate, HBPO Canada, Dakkota Integrated Systems, Syncreon, ZF-TRW and the Narmco Group.