Mich. grants FCA $4.56M for Sterling Heights investment
Lansing — State officials on Tuesday granted Fiat Chrysler Automobiles NV a performance-based grant of $4.56 million.
The Michigan Business Development Program grant was awarded in connection with the investment of more than $1.48 billion by FCA US to convert its Sterling Heights Assembly plant in Metro Detroit from unibody construction to body-on-frame to support production of the next-generation Ram 1500.
The company on Tuesday confirmed it will add 700 new jobs when production of the pickup begins at the plant. Those jobs are roughly 1,000 less than the potential workforce increase outlined by the United Auto Workers as part of the union’s deal with the automaker in 2015.
FCA US officials said the company is “not confirming total SHAP workforce at this time,” saying it “will assess employment needs as production ramps up.” The number of new jobs in Sterling Heights likely will be determined by the number of workers who follow the Ram 1500 from Warren to Sterling Heights or if a third shift is added.
According to United Auto Worker’s 2015 contract summary for members, there’s a “potential workforce increase” of 1,751 people at the plant in Sterling Heights.
State officials said FCA would have a base employment of 4,600 at Sterling Heights before the new hires. That would be a substantial increase from the nearly 1,900 employees at the plant as of July.
The Michigan Business Development Program is designed to provide grants, loans or other economic assistance to businesses for “highly competitive projects in Michigan that create jobs and/or provide investment.” At least 50 jobs must be created to qualify for the program, unless it is considered a “high-technology activity,” in which only 25 jobs need to be added.
The money for FCA US is about half of the maximum $10 million any one project may be given as part of the program.
State officials say the incentives helped ensure the company kept production of the pickup — currently in Warren — in Michigan, rather than other existing plants in Illinois or Ohio.
The incentives follow the Michigan Strategic Fund board’s approval of a 15-year property tax exemption valued at $11.3 million on up to $1 billion in new equipment at the plant in July.
Michigan Economic Development Corp. CEO Steve Arwood during a roughly 10-minute press conference after the board meeting explained why the company was awarded both incentive packages from the state.
“I think the impetus is pretty clear. That’s a big plant,” Arwood said. “And that’s a big investment they’re making in that plant, which could have gone anywhere. That’s foundational to Michigan, and we’re certainly going to want to fight for any of those jobs that we can get.”
Arwood repeatedly avoided answering whether the MEDC would ever turn down an investment opportunity for one of the Big Three automotive companies in Michigan, and would not say whether the auto companies have ever made a similar investment but without state aid to sweeten the deal.
“We’re seeing a commitment to some of these older plants to provide a level of tooling upgrade that I haven’t seen I’ve been on the Strategic Fund Board,” Arwood said. “I think that’s incredibly important. In some ways, that’s almost a new plant when you think about it.”
Production of the Chrysler 200 midsize sedan — the Sterling Heights plant’s sole product since 2010 — will end in December. The company has previously said future plans for the Warren Truck “will be announced at a later date.” According to the UAW’s 2015 contract summary for members, Warren is expected to have a new product in 2019 and a potential workforce reduction of 2,406 people.
The company employs more than 9,500 at the assembly plants in Sterling Heights and Warren, as well as supporting stamping plants.
Fiat Chrysler CEO Sergio Marchionne earlier this year said the new pickup will go on sale by January 2018.
Marchionne said Warren Truck would continue to build the current Ram 1500 for a period of time before it would “embrace the new architecture for the Grand Cherokee and the Grand Wagoneer.”