Howes: Wrangling over Jeep's future in Ohio
When Sergio Marchionne famously said the Jeep Wrangler would be built in Toledo as long as he's CEO, he set high expectations.
Now he's got some explaining to do, courtesy of Jeep's success and tightening federal fuel economy regulations that are putting such iconic Detroit metal as the new Ford F-150 pickup and maybe the next-generation Wrangler on a diet called aluminum.
Marchionne said as much at last week's Paris Motor Show. He suggested an aluminum future for Wrangler (influenced, in part, by Ford's move) could mean the new model will come from a Chrysler plant in Michigan or Illinois — not its ancestral home in Toledo
His on-the-record musing ignited a predictable round of hand-wringing that is set to culminate in a meeting at 1 p.m. Thursday in Auburn Hills. Joining the CEO of Fiat Chrysler Automobile NV and key lieutenants will be an Ohio contingent including Toledo Mayor Michael Collins, the state's top economic development executive and Beth Hansen, chief of staff to Gov. John Kasich.
"There is no intent to walk out of Toledo," a source close to the situation said Wednesday. "We're not going to adversely affect employment. The issue is what we're going to build there."
Exactly, and if Toledo and United Auto Workers Local 12 get a say, that product will be the new Wrangler they claim as their own — not a full-size SUV dubbed Jeep Grand Wagoneer and not another new model planned for the hot Jeep brand.
"We always thought it was automatic we'd build the new one in 2018," Bruce Baumhower, president of Local 12, said in an interview. "The Jeep was invented here in Toledo during World War II and became a civilian Jeep after World War II. It's just part of our DNA."
"There's just something about that Wrangler — this is home. It's emotional for us. We just never considered we couldn't do that here in Toledo."
Nor, it's probably safe to say, did they consider the unintended consequences of Jeep's growing sales success colliding headlong with sharply higher fuel economy targets set by the Obama administration and stretched production capacity in Toledo.
Welcome to the new American auto industry, where restructured companies are juggling conflicting realities. Marchionne is weighing his intent to satisfy market demand with existing plant capacity against the investment and production implications of adopting new technology to meet aggressive federal targets.
Something has to give.
The "discussions that have gone in the past about the F-150 ... going to aluminum are going on inside our house now," Marchionne said in Paris, according to a transcript provided by Chrysler.
The automaker has concluded there needs to be "a complete rethink" of the Wrangler's fundamental architecture; that its engines need to be downsized and probably turbo-charged; that its body structure may require lighter materials still capable of delivering Jeep performance.
"If the solution is aluminum, then I think unfortunately Toledo is the wrong set up to try and build a Wrangler because it requires a complete ... reconfiguring of the assets which would be cost prohibitive," he continued, adding that it would be "so outrageously expensive for us to try and work out that facility."
Doesn't matter that "there will be zero impact on headcount and on employment levels" in Toledo, as he put it. Or that he credits members of Local 12 with working cooperatively with Chrysler through difficult times. Or that other new models are almost certain in the years to come.
Marchionne's Wrangler promise, sounding in Paris more like a strong preference, is the equivalent of holy writ on the shop floor, inside Local 12, among local political and business leaders and around the northwestern Ohio town that birthed Jeep as part of the Arsenal of Democracy.
But few things in today's auto industry are immune to the disruptive technological power of federal fuel economy rules reshaping business strategies and vehicles, especially the body-on-frame trucks and SUVs that remain the profit lifeblood of Detroit's automakers.
Moving Wrangler to aluminum would mean costly changes to the assembly line, body shop and paint shop, an undertaking that likely would require the company to idle production of the profitable Jeep for months — piling lost revenue atop capital investment.
That's why Sterling Heights assembly or Belvidere in Illinois may prove more cost effective, even if it comes at the expense of Toledo's pride and a promise Marchionne may not be able to keep.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http:\\detroitnews.com\staff\27151.