Fiat Chrysler Automobiles announced on Sunday that they will invest $1 billion in two U.S. factories, an expansion which will create 2,000 new jobs.
Their plans include adding three new Jeeps to their lineup. Fiat Chrysler announced that they will modernize a factory in Warren, Michigan, a suburb of Detroit. The Warren factory will manufacture the Jeep Wagoneer and Grand Wagoneer. A second factory in Toledo, Ohio, will produce a new pickup truck.
While more detailed plans are yet to be announced, both factories should be producing the planned vehicles by 2020.
Fiat Chrysler’s decision to produce more large SUVs rather than passenger cars reflects recent sales trends. Consumers have been purchasing more SUVs and trucks. In 2016, U.S. car sales fell by 7 percent while SUV and truck sales rose by 8 percent.
Fiat Chrysler announced in 2016 that they would stop production of the Dodge Dart and Chrysler 200, instead opting for an automaker to build small cars under contract as Fiat Chrysler’s factories produced more trucks and SUVs.
Bloomberg quoted Sergio Marchionne, Chief Executive Officer of Fiat Chrysler.
“The expansion of our Jeep lineup has been and continues to be the key pillar of our strategy. We will finally have the capacity to successfully penetrate markets other than the U.S. which have historically been denied product due to capacity constraints.”
The announcement from Fiat Chrysler follows heavy pressure from President-elect Donald Trump to keep automobile manufacturers in the U.S. Many companies have been outsourcing labor to Mexico due to lower production costs. Recent tweets from Trump threatened auto manufacturers with border taxes if they operate in Mexico.
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.
— Donald J. Trump (@realDonaldTrump) January 5, 2017
Meanwhile, Trump has praised manufacturers, including Ford, who are choosing to operate within the country.
A photo posted by Donald J. Trump (@realdonaldtrump) on
Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow
— Donald J. Trump (@realDonaldTrump) January 4, 2017
Trump’s war on outsourcing has made many companies reconsider where they base their factories. The Guardian quoted Kristin Dziczek, who is the director of the industry, labor and economics group at the Center for Automative Research.
“Pretty much everybody is dreading being the subject of a tweet. Getting hauled out into the court of public opinion with virtually no warning is not something anybody wants to get engaged with.”
Donald Trump ran on a campaign of revitalizing the economy, promising more jobs for Americans. His threats to impose taxes on car manufacturers who outsource to Mexico are part of his efforts to rejuvenate the auto industry.
Fiat Chrysler has not stated whether or not their decision to expand their U.S. operations has anything to do with pressure from Trump, although Ford has denied caving into the President-elect’s threats. According to CNBC, Ford’s CEO attributed their decision to market demands rather than the threat of border taxes, although they did inform Trump and Vice President-elect Mike Pence of the decision, reporting that they were “very happy.”
Ford announced last week that they will invest $600 million in their plant located in Flat Rock, Michigan, adding 700 new jobs. They plan to keep building the Ford Focus at their plant in Mexico, while canceling plans for another $1.6 billion factory.
Fiat Chrysler currently employs nearly 12,000 workers in seven facilities in Mexico. If Trump imposes a border tax, it could result in a huge loss for the company; in 2015, Fiat Chrysler manufactured 477,000 vehicles in their plants in Mexico.
President-elect Trump has yet to publicly comment on the announcement from Fiat Chrysler.
[Featured Image by Sean Gallup/Getty Images]