By on February 4, 2014

rampickups

Automotive News is reporting that last week’s conference call on Chrysler’s quarterly financials and the structure of the newly merged Fiat Chrysler Automobiles, CEO Sergio Marchionne said that Fiat Chrysler managers were considering whether or not to build a third pickup truck assembly plant to cope with high demand for Ram light and heavy duty trucks. Marchionne had earlier vowed to never build another assembly plant in North America and in the conference call he reiterated his preference to run existing pickup plants in Warren, Mich., and Saltillo, Mexico, “flat-out.”

Marchionne said he believes Chrysler can increase pickup truck production by 15-20% without requiring an additional factory, placing the odds of building a new plant “under 50 percent.”

Sales of Ram pickups, which were redesigned for 2013, out performed the market last year. Ram pickups were Chrysler’s best selling vehicle, up 21% in 2013 to 355,673, compared to the pickup market in general, which was up 17% over 2012 figures.

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38 Comments on “Chrysler Weighs Third Pickup Plant Marchionne Doesn’t Really Want...”


  • avatar
    OldandSlow

    This is where it gets interesting. Can Chrysler grow and maintain a satisfactory level of quality with Marchionne at the helm?

    Stay tuned while Fiat siphons off whatever profitability occurs in North America to save the mother ship in Europe rather than build a cash reserve for the next downturn.

  • avatar
    FJ60LandCruiser

    And yet another foreign interest bleeds Chrysler dry.

    Your bailout dollars at work.

    Americans don’t want crappy Italian cars (either as the FIAT or rebadged Dodges). Jeep has been considerably poisoned by Eurotrash to the point no one wants to buy the new models.

    For Marchionne to take a chunk out of RAM production shows he wants to maximize his profits at the cost of North American operations.

    RAM should be its own company as it’s the only thing paying the bills right now.

    • 0 avatar
      FractureCritical

      I’m not sure I disagree with Marchionne.
      look at some of his contemporaries who have built plants in the US recently. the VW plant in Tenessee is under unionization threat right now, and to be honest, the local labor force available to the deep south plants is on par with the host state’s education system (not good). It’s a needless headache, and the skilled labor in the rust belt isn’t worth the money anymore. Let’s not even bring up Canada’s labor laws.

      Combine this with the fact taht the US has crappy free trade agreements with other countries, and the deal is pretty much done since the export potential is shot to hell. (although it’s not like you could sell a FS truck anywhere in the world except the US, but good luck using that plant for anything else.)

      What’s that leave you with? Mexico. The nations that is not a nation and is more of an ongoing drug war. Pass. Political stability is a major component when investing billions into a new plant and all the assocaited logistics functions that must follow it.

      • 0 avatar
        FJ60LandCruiser

        As you said, we’re not exporting Rams, they’re for US consumption only. And I’d prefer to buy an American made pickup than a Mexican one.

        Marchionne can’t get it through his head that pickups are a huge business boom to Americna car manufacturers.

      • 0 avatar
        TMA1

        Mexico is the world’s #4 producer of automobiles. The new Mazda facility just came online. I own two Mexican-built Korean TVs. The drug war hasn’t kept the factories down there closed.

      • 0 avatar
        geeber

        Honda, Hyundai, Nissan and Toyota have had no problem getting the local labor force in their “Deep South plants” to produce consistently high quality products.

      • 0 avatar
        Charliej

        FractureCritical, you make some good points, but your last paragraph shows that you know nothing about Mexico. Mexico has a growing economy and international corporations are investing here in large numbers. The new Honda plant will be coming on line in the next few months to provide lower cost Fits for the US, Canada and Latin America. Mazda is building a new plant. Nissan has plants and is ready to open another one near Aguascaliente. As an American citizen living in Mexico, I prefer life here to life in the US. There are a lot of other US and Canadian citizens who feel the same way. The violence in Mexico is largely a result of the US demand for drugs. Away from the border with the US, Mexico is mostly a peaceful place. In the US, you can be shot dead anywhere. Too damn many idiots with guns there. You stay in the US with your declining standard of living and leave those of us who were smart enough to get out alone.

    • 0 avatar
      mike978

      “Jeep has been considerably poisoned by Eurotrash to the point no one wants to buy the new models.” Really? I thought they were selling well, including the new Cherokee (for now).

      • 0 avatar
        danio3834

        Haters gonna hate.

        Marchionne is shrewd, he doesn’t want to get caught in another economic downturn with an under-utilized plant, he’s got his share of white elephants in Europe. He’s smart to hold out until it’s absolutely necessary. Chrysler is MUCH leaner than before 2009 when it comes to manufacturing capacity. It’s wise to completely use what you’ve got before you commit to more fixed costs.

        • 0 avatar
          jhefner

          Not to mention a random event in the middle east or other parts of the world could cause a spike in gas prices; and put a dent in truck sales (again) until prices once again stabilize.

          Gas prices have been pretty steady around the $3.00 a gallon mark for about the past year or so; but anything that causes prices to jump around will dampen truck sales. It was pretty amazing to watch trucks recede from the roads in DFW when prices went over $4.00 a gallon; only to return once they flattened out again; we are only talking a period of a few years.

          • 0 avatar
            Hummer

            We get so little fuel from the Middle East at this point that they can just go ahead and bomb them to hell next time they create more trouble.

          • 0 avatar
            jhefner

            “We get so little fuel from the Middle East at this point that they can just go ahead and bomb them to hell next time they create more trouble.”

            Sounds good in theory; but in reality, the oil market is a global one, and upsets anywhere affect crude oil prices regardless of whether we buy directly from them or not.

        • 0 avatar
          Pch101

          “he doesn’t want to get caught in another economic downturn with an under-utilized plant”

          Marchionne isn’t dumb.

          And the money that would be spent on building a truck plant could be better invested elsewhere in the company, such as implementing the Alfa-meets-BMW program.

      • 0 avatar
        zerofoo

        My 2014 Grand Cherokee is one of the best vehicles I’ve ever owned (so far). Granted, that was designed before the Italian invasion.

        I want to buy a Wrangler Unlimited to replace my 2004 Grand Cherokee, but I may hold out until the 2016 redesign.

        Marchionne and company better not screw up the new Wrangler.

    • 0 avatar
      sirwired

      “Jeep has been considerably poisoned by Eurotrash to the point no one wants to buy the new models.”

      Huh what? Exactly which alternate universe are you living in? In case you missed it, the monthly sales numbers just released show Jeep up 38% YoY.

    • 0 avatar
      pgcooldad

      FJ,
      Did you miss this posted by Mr. Baruth just yesterday.
      http://www.thetruthaboutcars.com/2014/02/meet-our-new-long-termer-sorta/

      This Jeep was purchased by his father at his recommendation – “Insofar as he bought it at my direct suggestion” – and based on the comments, with overwhelming approval of a lot of “car people” around here.

      Also, we at Chrysler have been bleeding quite a few of what FIAT has to offer, that we desperately needed: A management team who actually listens and implements what the true “car people” inside Chrysler bring to the forefront, i.e. class leading interiors, better riding trucks, better suspension and handling. Costly small and medium car platforms to the tune of billions of dollars in savings (Dart, Cherokee, 200 to start. 300 and Charger sharing platforms with Maserati next). Additional engine technology to better compete and lead in the marketplace. Just announced today – The Ram 1500 diesel is rated at 20 city, 28 highway, and 23 combined, where the Toyota Tacoma, with a four-cylinder engine and manual transmission, is rated at 21 city, 25 highway, 23 combined. They bring a new manufacturing system and discipline that is very costly to develop. And much more.

      They have helped us and we don’t have any complaints when it comes to us helping them because we would not be here if it wasn’t for FIAT. Moreover, I see first hand the sharing of technology, management, ideas and best practices. Yes, even with Maserati and Ferrari.

      The company is now named Fiat Chrysler Automobiles and we employees stand behind it. Italians, Americans, Canadians, Brazilians and Mexicans we all respect and need each other.

      BTW – The CEO of the holding company that owns Fiat Chrysler Automobiles is an American.

      • 0 avatar
        FJ60LandCruiser

        May want to improve the QC on the Grand Cherokees and Cherokees, then.

        One has been plagued with recalls and the other couldn’t even make it to market on time because of QC issues.

        I have only interest in two Chrysler vehicles:

        The Ram pickup and the Wrangler. And neither has any of FIAT’s DNA on them, yet. God help your company when the Italians start screwing with them.

        • 0 avatar
          Vulpine

          FJ, just because your favorite model of Toyota is being discontinued here in the States is no reason to spread false stories about the survivor. QC is exactly WHY Jeep has been doing these things on their own without being forced to by the NHTSA. Their own quality control is discovering that the programming in the cars’ computers is off and they’re fixing them. That’s what QC is all about. Your complaint would be far more valid if they were recalling because of customer complaints, no? Again, it wasn’t “QC Issues” but rather QC CATCHING the issues.

  • avatar
    Onus

    Ford use two Plants for all it’s f150′s.

    If ford can do it so can Chrysler.

    IIRC ford sells f150′s in central america and most south american countries. So some of them do get exported.

    • 0 avatar
      Hummer

      It would make more sense to expand an existing facility.

    • 0 avatar
      danio3834

      Chrysler has one plant for Ram 1500s and one plant for HDs (2500+). Ford has two plants for the F-150, and a third for Super Duty.

      Of course the Ford trucks sell in much higher volume to support 3 plants, but if the Ram trucks continue to outpace the market, they’ll eventually need a third as well.

      • 0 avatar
        bball40dtw

        Do they not build the regular cab Ram 1500 in Saltillo anymore? I know its such a small volume, but I remember them being built there a couple years ago. I know this impacts all four people that buy a regular cab 1500.

      • 0 avatar
        Onus

        I was just trying to show that capacity can be expanded at existing plants. Even if they have to build a huge additional part on a existing plant it would be better than creating a whole new plant.

        Chrysler already had a 3rd plant that they ditched during bankruptcy and was demolished.

  • avatar
    Vulpine

    Marchionne, let them have their new plant–on one condition: They MUST produce a Wrangler-based Jeep pickup and maybe a Cherokee-based one for the mid-size market. They get what they want; you get what you want. Win-win.

    • 0 avatar
      Hummer

      Wrangler is midsize, almost compact.

      • 0 avatar
        Vulpine

        Aye, that’s true. But not everyone who wants a Jeep pickup wants a Wrangler-based model. You don’t remember how well the old Commanche did for Jeep back in the ’70s, do you? Or the even older Gladiator full-size. True, they were all niche in one way or another, but they were almost as popular as the old CJ itself.

  • avatar
    kosmo

    1. If Marchionne builds a full size truck plant anywhere but US or Canada, the Ford and Chevy sales and marketing guys will be jumping for joy, and shopping on line for ways to spend there unexpectedly huge bonuses resulting from huge sales increases.

    2. If FiChry REALLY wants to increase truck sales, make the V6 diesel a flat $500 option. Sales would increase 15% at a minimum.

  • avatar
    Lou_BC

    I’d have to side with Marchionne. Current sales may show a need but what about long term? Toyota is in a similar position with the Tundra/Tacoma and they don’t want to build another plant. We will see increased utilization of existing facilities, upgrades etc. well before a new plant.
    The EU has signed a FTA with Canada. They could modify EU plants to build products for Canada and use the USA plants for US domestic production. Marchionne has already hinted at using EU plants to supply the USA.
    He may be waiting out FTA negotiations between the EU and the USA for that same reason. Why spend a billion in the USA or Canada and get stuck with UAW/Unifor labour when it would sooth pissed of Italians(D/T moving head office out of Italy) by retooling for export and increase utilization of heavily socialized plants that do not allow employee lay-offs.

  • avatar
    deanst

    On the call yesterday to refinance the VEBA debt, Marchionne emphasized that he is more interested in getting the optimal usage out of the existing factories. There was also no mention of a new factory in his capex plans.

    A new factory is not happening.

    • 0 avatar
      bobman

      Good move. Why on earth would anyone suggest that Sergio build another plant when he can increase output by 15% to 20% with current capacity available. Too many other important projects seeking the few resources available at the moment.

  • avatar
    Big Al from Oz

    Fiat has a considerable amount of overcapacity in Europe.

    Mexico doesn’t have the restrictive labour practices as the US’s UAW driven ‘model’.

    Why would you want to have a factory in the US?

    Here’s an interesting link, look at where this company is headquartered and it’s customers. Many of our TTAC readers will be mildly surprised.

    Like I stated why build in the US, especially when you still have at least 20% more capacity. Innovation could improve that even further.

    http://www.metalsa.com/

  • avatar
    guevera

    “Marchionne had earlier vowed to never build another assembly plant in North America”

    Damn. My wife really, really, really wants a new 200 convertible (actually she wants the Lebaron convertabile she drove as a teenager…but they stopped making ‘em 20 years ago). And now we can’t buy one. Sucks.

    I know every CEO is all about stabbing American workers in the back at every opportunity. But when one is that flagrant about it I can’t buy from his company.

    • 0 avatar
      and003

      @guevera: Considering the problems Fiat has with manufacturing overcapacity in Italy, why should Marchionne build another assembly plant in North America or anywhere else, especially if he can satisfy demand with the plants that FCA has now?

  • avatar
    billfrombuckhead

    I hate to say this for a variety of reasons but Chrysler needs an aluminum “world Ram” that can also be the basis for the next Wrangler. Build the Jeep in Toledo and the truck in Brasil and China.


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