FCA to build Jeep in re­vived Detroit plant

Mack fac­tory would be 1st new assem­bly line in city since ’90s

The Detroit News - - Front Page - BY NORA NAUGHTON, IAN THI­BODEAU AND DANIEL HOWES The Detroit News

Detroit — Fiat Chrysler Au­to­mo­biles NV plans to con­vert an idled en­gine plant in the city into an assem­bly plant as part of the au­tomaker’s plans to add a new three-row Jeep SUV to its lineup, The Detroit News has learned.

The Auburn Hills-based au­tomaker plans to re­vive Mack Av­enue En­gine II, which has been idled since 2012, as an assem­bly plant build­ing a new three-row Jeep Grand Chero­kee for model year 2021, mul­ti­ple sources fa­mil­iar with the plans told The News. The move could add as many as 400 new auto jobs in the city.

The ren­o­vated Mack Av­enue fa­cil­ity would be the first new auto assem­bly line to open in Detroit in 27 years, po­ten­tially cush­ion­ing the blow of Gen­eral Mo­tors Co.’s plans to stop pro­duc­tion of four sedans at its Detroit-Ham­tramck assem­bly plant by June 1. FCA’s plans are the lat­est move by au­tomak­ers in the wan­ing days of the year be­fore Detroit’s au­tomak­ers be­gin to rene­go­ti­ate their con­tracts next year with the United Auto Work­ers.

For­eign and do­mes­tic au­tomak­ers are un­der in­creas­ing pres­sure from Pres­i­dent Don­ald Trump to boost pro­duc­tion of cars, trucks and SUVs in the United States — even as his ad­min­is­tra­tion wages a costly trade war with China, Canada, Mex­ico and the Euro­pean Union that is raising steel prices and threat­en­ing tar­iffs on im­ported ve­hi­cles.

FCA’s plans for its Detroit plants come as GM CEO Mary Barra was on Capi­tol Hill for a sec­ond straight day to cau­cus with Michi­gan’s con­gres­sional del­e­ga­tion and Ohio’s two sen­a­tors. They want the au­tomaker to re­con­sider its plans to idle four U.S. plants next year, a re­quest that Barra ap­pears to have po­litely re­buffed.

When Mack II starts pro­duc­tion of the three-row Grand Chero­kee, FCA would be­gin re­tool­ing Jef­fer­son North Assem­bly Plant — di­rectly across the street from the Mack Av­enue En­gine Com­plex — to make way for the next gen­er­a­tion of the two- and three-row Grand Chero­kee. A pub­lic an­nounce-

ment is ten­ta­tively sched­uled for the end of next week.

An FCA spokes­woman and the of­fice of Mayor Mike Dug­gan de­clined com­ment.

“FCA is es­sen­tially out of ca­pac­ity,” said Jeff Schus­ter, an an­a­lyst with LMC Au­to­mo­tive in Troy. “They’re kind of run­ning up against be­ing against full ca­pac­ity. This is a very dif­fer­ent sit­u­a­tion than what GM is deal­ing with.”

Even as Fiat Chrysler of­fi­cials mull de­ci­sions to pre­pare for a fu­ture ex­pected to in­clude ex­pen­sive elec­tric and au­ton­o­mous ve­hi­cles, the au­tomaker needs to in­vest in a new assem­bly line to build the prof­itable SUVs that will raise cash to fund that fu­ture. Fiat Chrysler’s plant ca­pac­ity uti­liza­tion in Novem­ber hit 92 per­cent in North Amer­ica.

The ca­pac­ity crunch is not an ac­ci­dent. In 2016, FCA’s late CEO, Ser­gio Mar­chionne, shocked the in­dus­try when he con­firmed FCA would aban­don car pro­duc­tion in the United States and re­tool the plants to build profit-rich Ram pick­ups and Jeep SUVs. The plans to con­vert Mack II to build the Grand Chero­kee are the lat­est move in that strate­gic re­align­ment.

FCA also re­cently ap­proved plans to spend six months next year re­tool­ing its War­ren Truck Assem­bly Plant to pre­pare for pro­duc­tion of a 2021 full-size three-row SUV, the Jeep Wagoneer. The au­tomaker likely has de­layed plans to repa­tri­ate from Mex­ico pro­duc­tion of the Ram Heavy Duty.

Con­struc­tion on Mack II, in­ter­nally dubbed “Plant X,” likely would be­gin next year, as Detroit’s au­tomak­ers pre­pare to be­gin na­tional con­tract talks with the UAW. To con­vert the old en­gine plant to a full assem­bly line, sources said, the au­tomaker would need to add at least a body and paint shop.

Re­viv­ing the idled half of the Mack en­gine plant as an assem­bly op­er­a­tion would im­prove a wors­en­ing ca­pac­ity prob­lem for Fiat Chrysler. With strong de­mand for its Jeep and Ram prod­ucts, the au­tomaker has shuf­fled prod­ucts from plant to plant in re­cent years while it re­tools for new ve­hi­cles — an at­tempt to avoid the sig­nif­i­cant fi­nan­cial hit of idling pro­duc­tion of its most prof­itable ve­hi­cles.

Fiat Chrysler’s North Amer­i­can assem­bly plants are cur­rently run­ning at 92 per­cent ca­pac­ity, ac­cord­ing to data com­piled by LMC Au­to­mo­tive for The Detroit News. By com­par­i­son, GM and Ford Mo­tor Co. were op­er­at­ing at 72 per­cent and 81 per­cent through Novem­ber, re­spec­tively.

But FCA’s Jef­fer­son North plant, on the west side of Con­ner be­tween Mack and Jef­fer­son, is op­er­at­ing at 130 per­cent ca­pac­ity. That means the au­tomaker is run­ning ex­tra shifts to meet de­mand for the Jeep Grand Chero­kees, Jeep Grand Chero­kee SRTs and Dodge Du­ran­gos made there.

Only two of Fiat Chrysler’s U.S. assem­bly plants are op­er­at­ing at be­low 80 per­cent ca­pac­ity in 2018: the Toledo Sup­plier Park and War­ren Truck Plant. Cur­rently build­ing only the Ram 1500 work truck, the War­ren plant is op­er­at­ing at just 46 per­cent of ca­pac­ity.

The new pro­duc­tion line on Mack Av­enue would also add a valu­able new three-row prod­uct to Fiat Chrysler’s hot-sell­ing Jeep lineup. The re­vamped line is ex­pected to add hun­dreds of new jobs on Detroit’s east side and to bol­ster the city’s tax base.

FCA’s plans for its U.S. plants are a stark con­trast to GM’s. The Detroit au­tomaker plans to idle five plants in North Amer­ica next year, im­per­il­ing the jobs of 6,300 line work­ers in the re­gion as it slashes some 8,000 white-col­lar jobs in a re­struc­tur­ing plan de­signed to save the Detroit au­tomaker $6 bil­lion by 2020.

Among the af­fected GM plants is Detroit-Ham­tramck Assem­bly, staffed by nearly 1,350 union work­ers and one of only two ve­hi­cle assem­bly plants left in Detroit.

Should GM’s Detroit plant close as part of 2019 con­tract talks with the UAW, Fiat Chrysler’s Jef­fer­son North Assem­bly Plant stood to be­come to fi­nal auto assem­bly plant in Detroit — un­til the Mack II pro­ject emerged.

Klaku­lak fam­ily

Kaleb Klaku­lak vis­its his best friend Kenneth “K.J.” Gross at Chil­dren’s Hos­pi­tal, where K.J. was laid up from Jan. 4 un­til May 1, when he died from con­ges­tive heart fail­ure at 12. Now, Kaleb is work­ing to en­sure his buddy’s un­marked grave at Detroit’s Elm­wood Ceme­tery will bear an epi­taph.

John T. Greil­ick / The Detroit News

The idled Mack Av­enue En­gineII plant in Detroit will be ren­o­vated to pro­duce a new three-row Jeep SUV.

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