Howes: Detroit's new Jeep plant signals city turning a corner
Detroit's first new auto plant in nearly 30 years got the official green light this week, grudgingly.
Fiat Chrysler Automobiles NV will invest $1.6 billion to convert its Mack Avenue Engine on the east side into a new Jeep assembly plant and $900 million to upgrade Jefferson North Assembly building Jeep Grand Cherokees, creating nearly 5,000 jobs expected to pay an average annual wage of $58,000.
Detroiters will get a first, month-long exclusive crack at those jobs, second only to current FCA workers whose union contract permits them to bid for slots. But no specific number of Detroit hires is guaranteed under terms of the city's agreement. The reason: guarantees can't be ensured if new hires would need to meet the automaker's hiring standards and pass a drug screening that includes testing for marijuana.
“These are conversations that we have to have to get Detroiters employed,” Mayor Mike Duggan said. “But we have exactly the language I wanted. Detroiters are willing to learn the skills and willing to go to work. But if you live in the suburbs, you are going to be at the back of the line.”
Not particularly diplomatic, that swipe at the suburbs. But it's political reality in Detroit, where the reinvestment in the core downtown, the influx of employees from beyond Eight Mile and the legacy of mistrusting big business fuels a public hunger for clear, legally enforceable commitments to guard against corporate backsliding and broken promises.
The city and state combined are offering incentives worth far less per job than other major auto plant projects over the past decade — $57,172 per job, or 11% of the total investment, compared to $225,000 per job, or 56% of total investment in the Toyota-Mazda joint venture in Huntsville, Ala., last year.
That's one indication of just how attractive the deal, its location and its proximity to suppliers are to the maker of Ram trucks and Jeep SUVs, arguably the most valuable American auto brand in the world. Like any other global automaker, FCA had options, and it chose to double-down on Detroit to burnish its industrial heartland cred and help its adopted hometown.
Then why did City Council members criticize the package, and complain about its tight deadlines, even as they voted to approve it? Because they don’t fully appreciate the scale of this investment — and how quickly other communities would pay a lot more and require a lot less to get it.
Memo to council: Do you know how exceedingly rare an investment like this, in this town, actually is? Go to Lordstown, Ohio, where General Motors Co. is moving to shutter its vast assembly and stamping operation, effectively excising more than 1,600 jobs from the battered Mahoning Valley. Ask them.
Count the reasons Detroit hasn't seen a new assembly operation here since FCA's predecessor, Chrysler Corp., opened Jefferson North in 1991: too much excess plant capacity, a product of declining U.S. market share for the Detroit Three; until the city's bankruptcy nearly six years ago, the high cost of doing business and the comparative inability of City Hall to get things done.
And, finally, the arc of Detroit's decline, culminating in emergency management and the largest Chapter 9 bankruptcy in American history. Not exactly the makings of an invitation, those, to invest billions in a city whose automotive pedigree existed more in history and popular imagination than hard economic reality.
Look, you can't do deals in this town without inviting the requisite carping — about incentives, about land, about too little public input, about corporate commitment beyond investing in the asset at hand, and about working with anyone whose last name is Moroun.
A little perspective, please. When the late Sergio Marchionne started talking with Duggan about this potential investment, he could have pulled an Amazon.com Inc., made the company's intentions known and sparked an expensive automotive arms race to land the plant.
Ol' Sergio and his successor, Mike Manley, could have mimicked Foxconn Technology Group's scam in Wisconsin, promised an enormous number of jobs in exchange for a budget-busting incentive package measured in billions — and failed to deliver. Or they could have insisted on the kind of packages Toyota Motor Corp. wrested from the states of Kentucky and Alabama, incentives reaching nearly $200,000 per job or more.
But they didn't. Instead, they made a deal to build a new assembly plant in Detroit, to reap the high-paying union jobs that come with it, and to provide yet more evidence that the Motor City is turning a corner of its own making. That's huge.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM