By on May 22, 2019

Image: FCA

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]

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16 Comments on “New Detroit Jeep Plant a Done Deal; Incentives to Flow...”


  • avatar
    Lie2me

    Good news for Detroit, they sure can use it

  • avatar
    slavuta

    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!!

    • 0 avatar
      PrincipalDan

      Isn’t the Grand Cherokee and Durango assembly line running at 130% of capacity or something like that…

      It’s GREAT to have that much success but running the line that hard would give me pause in my purchase.

      • 0 avatar
        slavuta

        PrincipalDan

        I was nearly dreaming to buy JGC. What gave me big pause – Mexican Engine. But then I walked around them, sat in them and boy, each had something not fit well, not cut well, etc. I was looking at $50K+ Summit in showroom. And I couldn’t understand, is this thing new or certified (there was no sticker). I looked at bumper-fender-hood assembly. I thought the car was in an accident and was repaired. But I have not found any evidence of underbody being taken off, or new paint. All screws were original. I realized – this is assembly. Later I learned this car had 25mi on it. I went to see others and yep – they all had different panel issues. T?he one I saw just today had like 1cm gap at the corner of the door. You could tell that door is not stamped nicely.

        So, I’ve got really scared about quality of this thing and bought another Highlander. Although, I would buy Wrangler since it holds value well, with plan to sell it in 2-3 years.

    • 0 avatar
      mikey

      “Jeep needs a new plant, or new workers. Something. ” …

      The something would require FCA to bring the fit, and finish tolerances/standards to same level as the Italian plant.

      The individual assembler has minimal impact on final build quality . The operator performs his/her task with the materials, tools , and standards set by management.

      • 0 avatar
        redapple

        MIKEY

        I ve tooled up assembly plants and designed and installed fixtures, jigs and tools that ‘set’ hood fit, front and rear facias, head and tail lamps and etc.

        I would say the operator is responsible for 25% of it. Me- management the 75%. The operator must use the tool properly, calibrate it per instructions and perform his function in the proper sequence.

        • 0 avatar
          mikey

          @redapple

          Being that your one of the few here that actually know what they’re talking about, I get it. However its is still managements responsibility to ensure that the individual operator performs the job as required .

          Before moving to material handling I was a production group leader final assembly for over ten years , As such I worked very closely with the T&D people. Yes it was frustrating to see improper use of Jigs and squaring fixtures.

        • 0 avatar

          So UAW has nothing to do with that?

          • 0 avatar
            mikey

            @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 .

    • 0 avatar
      Lie2me

      I agree on the Renegade they have the fit and finish of something a lot better then what they are

    • 0 avatar

      I’ve always been impressed with the overall build quality of my Renegade. It continues to hold up after 3 years and 110k miles.

  • avatar
    Jerome10

    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.

    • 0 avatar
      SCE to AUX

      Yes, more corporate welfare.

      But no politician wants to explain to his constituents that he let thousands of jobs slip away because the city offered no incentives. Hence, they give away the farm every single time.

      • 0 avatar
        ravenuer

        Except NYC/Amazon.

      • 0 avatar
        Lorenzo

        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.


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