New Detroit Jeep Plant a Done Deal; Incentives to Flow

Steph Willems
by Steph Willems

Detroit City Council wrapped up a lengthy day of voting and approvals Tuesday, paving the way for a $2.5 billion Fiat Chrysler investment in two east-side assembly plants.

Part of the deal involves a complex series of land swaps benefitting both FCA and the land-rich Moroun family, plus a raft of tax incentives bound for the automaker. It’s a good thing FCA didn’t target its investment at New York City.

As part of a broader, Michigan-centered production push, FCA intends to convert the Pentastar-producing Mack Avenue Engine Complex into an auto assembly facility building the next-generation Jeep Grand Cherokee and a larger, three-row SUV. At the nearby Jefferson North plant, production of the Dodge Durango will continue alongside the new Grand Cherokee. Some 4,950 jobs are expected to be created by the investments.

For its part, city council greenlit the transfer of 215 acres of land in the area of Mack Ave. and St. Jean Street to FCA, some of it assembled via cash payments to private landowners. Among those landowners is the Moroun-owned Crown Enterprises, which receives 117 acres of public land and $43.5 million through the deal. This irked several council members, though not enough to sway the vote.

“I knew from day one that the biggest obstacle would be dealing with the Morouns,” Duggan said in remarks reported by the Detroit Free Press. “It was the biggest obstacle.”

The land swap was necessary for FCA to break ground on the Mack Ave. expansion by the end of the current quarter. FCA’s new three-row Jeep is expected to reach production by the end of next year, with the next-gen Grand Cherokee arriving in the first half of 2021. Plug-in hybrid variants of both models will also roll out of the repurposed plant.

Further financial grease was added to FCA’s wheels via the Michigan Strategic Fund, which ponied up $140 million in tax incentives for the automaker. Combined with city incentives and land swaps, the strategic fund’s assistance brings FCA’s avoided costs to $200 million.

[Image: Fiat Chrysler Automobiles]

Steph Willems
Steph Willems

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  • Slavuta Slavuta on May 22, 2019

    Jeep needs new plant, or new workers. Something. I looked at Renegades assembled in Italy and they have quality fit an finish. Wrangler should have rough edges by definition. But check panel fit in JGC. This is shame!!

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    • Mikey Mikey on May 22, 2019

      @Inside Looking Out.....To answer your question , yes . There was a time the the UAW/CAW had a whole lot to do with that . These days , not so much .

  • Jerome10 Jerome10 on May 22, 2019

    Good on the jobs front and investment within Detroit city limits. However, I am always skeptical of these deals. Will they pay for themselves? Are there binding pieces of the contract if the jobs don't materialize, etc etc? Not to mention, why is it that hugely profitable companies like FCA get such deals and breaks while the everyday companies currently in Detroit or considering investing in Detroit get slapped with all the BS? If Detroit, or anyone else, wants to be attractive to businesses, they'd be best served by making their cost of doing business as low as possible for EVERYONE, FCA or anybody else. I might take this depending on the numbers, but Detroit is never going to recover from a FCA factory and huge tax breaks in the wasteland of the east side while other businesses and residents pay through the nose and then on top of that get terrible public services, crime problems, etc.

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    • Lorenzo Lorenzo on May 24, 2019

      @SCE to AUX In this case, FCA is spending $2.5 BILLION and getting $200 million in incentives, some of which is lower taxes on future activity that wouldn't have happened without the new plant. FCA is paying the lion's share and getting a modern plant, while Detroit is getting 5,000 jobs and future tax revenue. Before the bankruptcy the politicians would have given away the store, but just six months after state oversight ended, the deal had to be a net benefit for the city, and it is.

  • Ltcmgm78 It depends on whether or not the union is a help or a hindrance to the manufacturer and workers. A union isn't needed if the manufacturer takes care of its workers.
  • Honda1 Unions were needed back in the early days, not needed know. There are plenty of rules and regulations and government agencies that keep companies in line. It's just a money grad and nothing more. Fain is a punk!
  • 1995 SC If the necessary number of employees vote to unionize then yes, they should be unionized. That's how it works.
  • Sobhuza Trooper That Dave Thomas fella sounds like the kind of twit who is oh-so-quick to tell us how easy and fun the bus is for any and all of your personal transportation needs. The time to get to and from the bus stop is never a concern. The time waiting for the bus is never a concern. The time waiting for a connection (if there is one) is never a concern. The weather is never a concern. Whatever you might be carrying or intend to purchase is never a concern. Nope, Boo Cars! Yeah Buses! Buses rule!Needless to say, these twits don't actual take the damn bus.
  • MaintenanceCosts Nobody here seems to acknowledge that there are multiple use cases for cars.Some people spend all their time driving all over the country and need every mile and minute of time savings. ICE cars are better for them right now.Some people only drive locally and fly when they travel. For them, there's probably a range number that works, and they don't really need more. For the uses for which we use our EV, that would be around 150 miles. The other thing about a low range requirement is it can make 120V charging viable. If you don't drive more than an average of about 40 miles/day, you can probably get enough electrons through a wall outlet. We spent over two years charging our Bolt only through 120V, while our house was getting rebuilt, and never had an issue.Those are extremes. There are all sorts of use cases in between, which probably represent the majority of drivers. For some users, what's needed is more range. But I think for most users, what's needed is better charging. Retrofit apartment garages like Tim's with 240V outlets at every spot. Install more L3 chargers in supermarket parking lots and alongside gas stations. Make chargers that work like Tesla Superchargers as ubiquitous as gas stations, and EV charging will not be an issue for most users.