Howes: FCA plant investments target metro Detroit, job creation
Fiat Chrysler Automobiles NV is just weeks from finalizing a jobs-creating announcement that would benefit the Motor City, even as crosstown rival General Motors Co. moves forward with plans to idle two metro Detroit plants this year.
FCA CEO Michael Manley is in the final stages of reviewing investment plans that likely would expand production of the next-generation Jeep Grand Cherokee at a revived Mack II engine plant in Detroit, assign production of the full-size Jeep Grand Wagoneer to Warren and more.
The automaker also has publicly confirmed plans to repatriate production of its heavy-duty pickups to Michigan from Mexico, a move hailed by America's tweeter-in-chief, President Donald Trump. Without saying so, Manley hinted they may be reconsidering that decision with another solution that still could add jobs here.
"The investment we've been clear we need to make is going to happen," Manley told The Detroit News in an interview Tuesday at the Detroit auto show. "For the last time, I'm just revising all the options. Because investing in additional capacity is not the trend in the motor industry."
No, it's not, as GM's plans to idle and likely close five North American plants suggests. Asked if there's any chance the potential investment could be targeted anywhere else outside metro Detroit, Manley answered with a single word: "No," adding, "The logical home for Grand Wagoneer clearly is Warren."
Manley expects to complete his review within the next two weeks. That would be just in time for Michigan's new governor, Gretchen Whitmer, to tout the investment in her first State of the State address on Feb. 5 — and for Detroit Mayor Mike Duggan, who met Manley on Monday on the show floor, to celebrate FCA's answer to GM's plans to idle its Detroit-Hamtramck Assembly Plant.
"There’s going to be some exciting news in the next few weeks," Whitmer said during the governor's customary walk of the auto show floor. "I’m not at liberty to talk further than that."
FCA's plans, first reported in December by The Detroit News, counter the prevailing trend of restructuring and retrenchment coming from GM and Ford Motor Co. Three years after FCA's legendary CEO, Sergio Marchionne, shocked the industry with his move to end car production in the United States in favor of trucks and SUVs, FCA's rivals are following — if later and at what feels like more painful costs.
"We dropped our shoe three years ago when we said we're pulling out" of the car business, "we're restructuring the blue-collar side," said Manley, who headed the automaker's Jeep and Ram brands before he was tapped abruptly to replace Marchionne just days before he died last July.
"The discipline of looking at your salaried headcount is a daily, weekly, monthly thing," Manley added. He's determined to guard against losing the underdog edge FCA developed coming out of its 2009 bankruptcy and its effort since to fatten margins and reduce industrial debt.
"Having to run lean is our life and will continue to be our life," he said. "Our restructuring happened at a time as our competitors came into those market segments. That wave is ongoing and will continue."
Being first can have its advantages. Marchionne's move to end car production in the United States prompted rivals like GM to renew claims for the car side of the business — especially once Ford last spring said it would be dropping all cars from its U.S. lineup, save the iconic Mustang.
"With these car segments, yeah, we've seen a decrease, but you've also seen an industry that's growing," Alan Batey, GM's executive vice president and president of North America, said in an interview last spring at a Las Vegas event with dealers. "A 2-million-vehicle midsize car market in the U.S. is not a segment that you don't want to be part of."
Until you change your mind. In a little more than a year, a GM beset with too much plant capacity, not enough customers to buy its cars and a fear of making old mistakes anew is reversing itself. And FCA, the earnings laggard for much of the past decade, is emerging as a star whose leaders had the foresight to see the market shift to SUVs before their domestic competition.
Manley is poised to reap that reward. How good, or bad, a CEO looks can owe much to the decisions of a predecessor, the prevailing economic conditions and whether the enterprise is primed to take advantage of market conditions.
On all three counts, the facts for now favor Manley. His boss of nine years moved to capitalize on the SUV craze armed with Jeep, arguably America's most iconic global brand, long before rivals; lower fuel prices, buoyant demand and comparatively low interest rates are bolstering sales; and FCA's higher plant capacity utilization overall is enabling the kind of investment Detroit is certain to celebrate.
"I think we have a clear picture of what we are," Manley said. "We have the strength now that is in line with our peers."
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.