Fiat Chrysler to Open New Assembly Factory In Detroit--6th Update
December 06 2018 - 7:43PM
Dow Jones News
By Christina Rogers and Adrienne Roberts
Fiat Chrysler Automobiles NV plans to open a new vehicle factory
in Detroit, according to people briefed on the plan, the first new
U.S. assembly plant to be built by a major domestic car maker in at
least a decade.
The Italian-American auto maker plans to make a sport-utility
vehicle at the new factory as part of its efforts to expand its
iconic Jeep brand, the people said.
Fiat Chrysler has said it would roll out more truck and SUV
models in the U.S. as the company responds to a sharp consumer
shift away from passenger cars in recent years.
The move comes as General Motors Co. Chief Executive Mary Barra
was on Capitol Hill Thursday, meeting with lawmakers upset about
the auto maker's plans to end production at assembly plants in Ohio
and Michigan.
President Trump and other elected officials also have blasted GM
for the cuts, which will result in up to 6,700 factory layoffs. GM
is cutting another 8,100 salaried workers.
The factories GM plans to idle are making slow-selling sedan
lines. Fiat Chrysler, which eliminated nearly all of its car lines
a year ago, has much less empty factory space in the U.S. Many of
its truck and SUV plants operate around the clock making popular
models like the Jeep Wrangler and Cherokee, and its Ram truck.
In a five-year plan laid out to investors in June, Fiat Chrysler
disclosed plans to add several SUV models to Jeep's lineup,
including a small SUV and a larger version of the Grand Cherokee --
while also reviving the Wagoneer and Grand Wagoneer nameplates,
which had been dormant for decades.
Assembly plants are typically major employers, hiring several
thousand workers on multiple shifts, and can take up to two years
to construct and cost about $1 billion.
The new factory would be one of the first major move under new
Chief Executive Mike Manley, who took over for longtime CEO Sergio
Marchionne this summer. Mr. Marchionne died in July.
Prior to taking the top job, Mr. Manley ran the company's iconic
Jeep sport-utility brand, helping to expand its lineup of models
and boost sales globally.
The new assembly operation also marks a reversal for the
company, which under Mr. Marchionne, had been resistant to adding
more bricks-and-mortar factory space after closing plants during
its 2009 bankruptcy restructuring. However, the U.S. car market
boomed following the 2007-09 recession and consumer demand for its
pickups and sport-utility models soared amid low gasoline
prices.
In that time, several foreign car makers announced plans to
build new factories in North America to serve the U.S. market,
while Ford Motor Co. and GM have added onto existing plants to
build more models.
But Fiat Chrysler has continued to max out its existing factory
space. The auto maker's plant utilization -- a measure of its
output versus its production limit -- is 92%, according to
forecasting firm LMC Automotive. That is far higher than the 81%
rate at Ford and 72% at GM.
Fiat Chrysler's U.S. sales have climbed in 2018, even as the
broader market plateaued. Through November, the auto maker's U.S.
sales are up 8%, driven by high demand for its trucks and SUVs.
Since even before his election, Mr. Trump has pressed auto
makers to produce more vehicles domestically to create more U.S.
jobs, criticizing Ford and GM in the past for building cars in
Mexico.
During a meeting with the global auto executives in May, Mr.
Trump praised Mr. Marchionne for the company's plans to move some
truck production from Mexico to Michigan.
"Right now, he's my favorite man in the room," Mr. Trump
said.
Write to Christina Rogers at christina.rogers@wsj.com and
Adrienne Roberts at Adrienne.Roberts@wsj.com
(END) Dow Jones Newswires
December 06, 2018 19:28 ET (00:28 GMT)
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