Fiat Chrysler to Open New Assembly Factory in Detroit – The Wall Street Journal

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Jeep Wranglers moving along an assembly line at the Chrysler Jeep Assembly plant in Toledo, Ohio, on Nov. 16.

Jeep Wranglers moving along an assembly line at the Chrysler Jeep Assembly plant in Toledo, Ohio, on Nov. 16.


Photo:

rebecca cook/Reuters

By

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.

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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 moves 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

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