Fiat Chrysler Automobiles NV on Tuesday announced a US$4.5 billion plan that includes building the first new auto assembly plant in Detroit, Michigan, in almost three decades and increasing its workforce in the area by about 6,500 jobs, an investment officials touted as an uncommon opportunity to revive the region’s 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 an assembly plant for the Jeep Grand Cherokee and a new, three-row, full-size Jeep SUV and plug-in hybrid models.
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 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 Fiat Chrysler’s hourly workforce in the city and the expected average wage for the new jobs is about US$58,000 a year.
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.
Michigan Governor Gretchen Whitmer said it has been a long time since the state has seen an automotive investment as “big and transformative” as Fiat Chrysler’s plan.
The investment would also have a ripple effect, boosting the automotive industry and helping other non-auto businesses elsewhere in Michigan and nearby states, Whitmer said.
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 80 hectares 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.
Most of the needed land would be for expanding the footprint of the existing facility, parking and other uses.
City officials signed a memorandum of understanding with the automaker and they were due to iron 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 next year.
The automaker’s injection of money and jobs into Detroit contrasts sharply with news from rival General Motors Co, which announced plans to shutter its Detroit-Hamtramck plant next year, and plans to close four others in the US and Canada.
City officials said that they would help bring those 5,000 new jobs to the city without displacing any residents.
Fiat Chrysler’s massive investment called to mind online retailer Amazon.com Inc, which last year had more than 230 municipalities competing for its second headquarters and offering billions of dollars in inducements.
Northern Virginia and New York City ultimately won the competition, but Amazon recently canceled the New York project — and about 25,000 promised jobs — after running into fierce opposition to those incentives from lawmakers and political activists on the left.
Fiat Chrysler’s industrial overture to the Detroit area is not the same, said Kristin Dziczek vice president of industry, labor and economics at the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan.
For the automaker, she said, it is akin to “investing with friends in Michigan they know very well.”
She said that the city and state are likely to “come to the table with something good” because they see a realistic return on their investment.
The city said it is offering US$12 million in tax credits.
“You wouldn’t find local opposition to this issue like in New York — people in Detroit and Michigan want auto jobs,” Dziczek said. “[Fiat Chrysler] is not out there waving their dollars around saying: ‘Who will give us the most incentives?’ ... They weren’t playing an incentive game. They were looking at a business case and what makes sense.”
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