New Detroit Jeep Plant a Done Deal; Incentives to Flow
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]
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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