Fiat Chrysler Will Invest Heavily In Michigan Plant

Fiat Chrysler Automobiles announced plans to modernize a plant in Michigan, and will be moving production from Mexico to the United States.

In this Tuesday, May 6, 2014, file photo, a vehicle moves past a sign outside Fiat Chrysler Automobiles world headquarters in Auburn Hills, Mich.
Carlos Osorio / AP Images

Fiat Chrysler Automobiles announced plans to modernize a plant in Michigan, and will be moving production from Mexico to the United States.

Fiat Chrysler Automobiles announced a significant investment in its manufacturing plant. The company announced on Thursday it will spend $1 billion to modernize the plant and migrate production of pickup trucks from Mexico to the factory in Michigan.

The financial decision will add 2,500 new jobs. In addition, the automaker confirmed it would award $2,000 in bonuses to each of the 60,000 hourly and salaried employees in the U.S, according to the New York Times.

The company’s CEO, Sergio Marchionne, said in a statement that these announcements reflect their ongoing commitment to their U.S manufacturing footprint and to the dedicated employees who have made FCA successful.

The automobile manufacturer alluded to the new tax law signed by President Donald Trump, indicating that all of these recent developments were made possible by this new legislation.

“The automaker said both actions were ‘made possible in part’ by the tax bill that President Trump signed into law last month. Mr. Marchionne added that ‘it is only proper’ that employees share in the savings generated by the tax bill. ‘We openly acknowledge the resulting improvement in U.S. business environment by investing in our industrial footprint,’ he said,” wrote the New York Times.

It is anticipated that the bonuses will be paid out in the second quarter of 2018. Furthermore, employees will have the possibility to receive any profit-sharing or performance-related perks.

Once the announcement was made public by Fiat Chrysler Automobiles, President Trump applauded the news on Twitter. He stated all of this was the result of historical tax cuts and reform.

Fiat Chrysler plans to revamp the plant in Warren, Michigan. The Italian maker of cars is set to unveil a new light pickup truck (Ram 1500) on Monday. As stated in the Times report above, the company has been on a reorganization spree and concentrated these new efforts particularly on its manufacturing operations division in the U.S.

Elsewhere, the motivation behind these swift organizational and financial changes has another implication. As reported by the Chicago Tribune, Trump has made it clear that he wants the U.S to withdraw from the North American Free Trade Agreement. This has raised concerns about how the automotive industry will be affected by the decision.

“The moves may prove useful to Fiat Chrysler’s cause. Threats by Donald Trump to withdraw the U.S. from the North American Free Trade Agreement or dramatically rework the deal have spurred warnings from the auto industry of major harm. The president also has said he’ll cut carmakers a break on fuel economy standards his administration is reviewing and explicitly asked them to return the favor by hiring more workers.”

If any major decisions on NAFTA were to take place in the near future, Fiat Chrysler Automobiles will be in a better position to weather such disruptions.