Fiat Chrysler ups the ante as automakers respond to Trump

09 Jan, 2017 9:24 am

DETROIT – Fiat Chrysler Automobiles said it will invest $1 billion to modernize two plants in the US Midwest and create 2,000 jobs, upping the ante as automakers respond to threats from President-elect Donald Trump to slap new taxes on imported vehicles.

FCA’s announcement that it would retool factories in Ohio and Michigan to build new Jeep sport utility vehicles, including a pickup truck, and potentially move production of a Ram heavy-duty pickup truck to Michigan from Mexico, also highlighted the auto industry’s keen interest in getting relief from tough fuel economy rules enacted by the outgoing Obama administration.

Many automakers plan to use the annual North American International Auto show in Detroit, which started on Saturday, to tout investments in the United States and a commitment to US employment against the backdrop of Trump’s criticism of automakers for shipping vehicles into the US from Mexico.

Automakers are girding for rounds of questions about Mexican investments and US jobs in the wake of Trump’s harsh criticism of automakers. Most of the major automakers in the US have substantial vehicle making operations in Mexico, as well as complex networks of parts makers that supply their factories in the US and support jobs and investment in states such as Ohio and Michigan.

FCA’s investment decisions were not related to Trump’s recent attacks Ford Motor Co,General Motors Co and Toyota Motor Corp for building cars for the US market in Mexico, people familiar with company’s moves said on Sunday.

The company had already signalled plans to expand truck and SUV production at its U.S. plants, and discontinued production of small and medium-sized cars in two U.S. factories.

FCA executives did not confer with Trump before making the decision on the new big SUVs and a Jeep pickup truck, according to a person familiar with the company’s thinking. The same source said Marchionne wanted to get out the news about adding jobs and investment in the United States in case FCA encounters more criticism from Trump.

Still, Fiat Chrysler’s announcement landed as executives global auto industry executives gathered for the annual auto show in a climate of growing uncertainty about the trade and regulatory policies the new Republican administration will pursue.

Trump, who will be inaugurated on Jan. 20, has talked about rolling back environmental regulations, and supporting corporate tax cuts — moves automakers would welcome. He has just as explicitly warned that he will move to raise the costs of importing vehicles from Mexico, a policy industry executives said could hurt their businesses.


Since Trump’s election, automakers and other companies have played up their investments in the United States. Last week, Ford scrapped plans to build a $1.6 billion plant in Mexico and invest $700 million in a factory in Michigan. Ford will still move production of Focus small cars to Mexico, but will instead cut total production of the cars by consolidating their assembly in an existing Mexican plant.

Hinrich Woebcken, chief executive of the North America Region for German automaker Volkswagen AG, told Reuters on Sunday the automaker plans to invest $7 billion in the United States between 2015 and 2019 and will start building its new Atlas SUV in Tennessee later this year.

Volkswagen has had a plant in Mexico for 50 years and it is not shifting any jobs to Mexico from the United States. “We do not make our investment decisions based on administrative cycles. Our business is really an 8-, 12-, 14-year horizon when we look at investments,” Woebcken said on the sidelines of the Detroit auto show.




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