Fiat Chrysler to invest $1.5B at Sterling Heights plant
Lansing — Fiat Chrysler Automobiles NV will invest $1.48 billion in its Sterling Heights Assembly plant to build the next-generation Ram 1500 truck.
Production of the Chrysler 200 midsize sedan — the plant’s sole product since 2010 — will end in December “in order to begin the transformation of the plant,” the company announced in connection to a Michigan Strategic Fund meeting for tax exemptions Tuesday in Lansing.
The Michigan Strategic Fund board approved a 15-year property tax exemption valued at $11.3 million on up to $1 billion in new equipment at the plant, according to the Michigan Economic Development Corp.
The state’s tax break on the new investment “situates that plant for the long haul,” said Steve Arwood, president and CEO and the Michigan Economic Development Corp.
“At that level, there’s places you could build a whole new plant for that amount of money,” Arwood said after the Strategic Fund board meeting.
Fiat Chrysler has to invest a minimum $900 million to receive a 50 percent reduction in the State Essential Services Assessment on manufacturing equipment, a levy that replaced the personal property tax.
Earlier this year, the Michigan Strategic Fund board granted FCA a five-year exemption of the essential services assessment valued at $770,904 for new equipment to build a next-generation four-cylinder engine at the company’s Trenton North Engine Plant.
Fiat Chrysler officials declined to release how many jobs could be created as a result of the investment or how long retooling is expected to take.
Macomb County will spend $500,000 in 2017 making improvements to the service drive along 16 Mile near the Sterling Heights plant, County Executive Mark Hackel said Tuesday.
Additional infrastructure improvements on the Mound Road side of the plant also are needed, Hackel said.
“We’re committed to working alongside of MDOT as well the locals to make that a reality,” Hackel told The Detroit News. “It’s sorely needed, the improvements on Mound Road.”
Fiat Chrysler CEO Sergio Marchionne earlier this year said the new pickup will go on sale by January 2018.
Marchionne said Warren Truck Assembly plant, which builds the Ram 1500, would continue to build the current Ram 1500 for a period of time before it would “embrace the new architecture for the Grand Cherokee and the Grand Wagoneer.”
The number of new jobs in Sterling Heights likely will be determined by the number of workers whom follow the Ram 1500 from Warren to Sterling Heights or if a third shift is added. According to UAW’s 2015 contract summary for members, there’s a “potential workforce increase of 1,751” workers in Sterling Heights.
The company on Tuesday said future plans for the Warren Truck “will be announced at a later date.” According to UAW’s 2015 contract summary for members, Warren is expected to have a new product in 2019 and a potential workforce reduction of 2,406 people.
The company employs more than 9,500 at the assembly plants in Sterling Heights and Warren, as well as supporting stamping plants.
Under the company’s four-year deal, Fiat Chrysler planned to invest $5.3 billion in production in the United States, including $3.4 billion in assembly operations.
If that investment amount stands, the company would have about $1 billion to retool Warren Assembly and any other assembly plants, including Detroit’s Jefferson North, which currently produced the Jeep Grand Cherokee and Dodge Durango large SUVs.
Fiat Chrysler earlier this month announced it plans to invest more than $1 billion and create 1,000 new jobs at Jeep plants in Belvidere, Illinois and Toledo. The plans are part of a previously announced strategy for the automaker to focus its North American production operations on pickups and SUVS.
The move will be a welcomed change for the more than 3,000 workers who produce the Chrysler 200 in Sterling Heights. Due to poor sales, employees have been on temporary layoffs for much of this year, with a shift of about 1,300 starting indefinite layoffs on July 5.
“This is great news for the men and women at Sterling Heights Assembly plant,” said Charles Bell, president of UAW Local 1700, which represents the Sterling Heights workers. “This will realize some of the anxiety our members have felt due to the loss of the second shift due to poor sales of the Chrysler 200. We look forward to building the highest-quality vehicles in the FCA lineup.”
Since 2009, FCA US has announced investments of more than $8.3 billion and added more than 25,000, including nearly 18,000 hourly, employees in its U.S. operations.
FCA US has an existing business tax credit capped at $1.7 billion through 2029 that is tied to the retention of 29,000 jobs in Michigan.