DETROIT (FOX 2) - Fiat Chrysler is announcing a massive expansion into its Jeep brand through a $4.5 billion assembly plant in Detroit and the creation of 6,500 jobs as it expands into the electric vehicle space for its Jeep line.
FCA announced the expansion Tuesday morning which will build the plant in Detroit, add production at five other currently existing Michigan facilities, and create almost 6,500 jobs.
FCA says, since 2009, they've invested $14.5 billion into the U.S. economy and added 30,000 jobs.
According to a press release from FCA, the company will work with the City of Detroit and Michigan to build the plant withing city limits. The move increases capacity to "meet growing demand for its Jeep and Ram brands", FCA said.
FCA says it will invest $1.6 billion tino the plats at Mack Avenue Engine Complex into the future assembly site for the next generation Jeep Grand Cherokee as well as an all-new 3-row full-size Jeep SUV and plug-in hybrid (PHEV) models, adding 3,850 new jobs to support production.
Under the plan, the company said it would reopen a shuttered engine plant in the city and convert another in the same complex into a future assembly plant for the Jeep Grand Cherokee and a new, three-row, full-size Jeep SUV and plug-in hybrid models for all.
According to FCA, the reborn Mack facility will be the first assembly plant build in Detroit city limits in almost 30 years. jefferson North was the last new assembly plant built in 1991.
Once complete, Mack will join Jefferson North as the only automotive assembly plants to be located completely within the city of Detroit.
A timeline of the assembly plant construction was not made available.
UAW Vice President Cindy Estrada released this statment on the announcement:
“I look at today’s investment as a reward for the efforts of our membership and a show of confidence that the members of the UAW are the best auto workers in the world. This is especially exciting given that these are good union jobs with union wages and benefits that have been collectively bargained for with the company. We also look forward to collaborating with FCA, the City of Detroit and other community leaders on a Community Benefits Agreement that re-imagines our city and empowers our citizens to create sustainable communities with long term viability.”
The Motor City was once home to about a dozen massive auto production plants, but a rash of closures helped to push Detroit's unemployment rate to a peak of almost 29 percent a decade ago. The new Chrysler plant would be the first auto plant to be built by any company in Detroit since 1991 and is expected to add 3,850 jobs. The company said in a news release that it would add another 1,100 new jobs at its Jefferson North Assembly plant in Detroit, and roughly 1,500 new jobs at facilities in the neighboring suburb of Warren. The investment would roughly double FCA's hourly workforce in the city.
Speaking at a news conference after the announcement, Detroit Mayor Mike Duggan called the deal a "once in a generational chance to change the economic" fortunes of Detroit. Gov. Gretchen Whitmer said it has been a long time since Michigan has seen an automotive investment as "big and transformative" as Fiat Chrysler's plan.
The investment will also have a ripple effect, boosting the automotive industry and helping other non-auto businesses elsewhere in Michigan and other Midwest states, Whitmer said.
Fiat Chrysler said the additional investments are subject to tax incentive packages it was working out with the city and state of Michigan. The automaker would need about 200 acres (80 hectares) of land for the project, most owned by the city, Great Lakes Water Authority, DTE Energy and the Moroun family, which owns significant amounts of city real estate and the Ambassador Bridge that connects Michigan to Ontario, Canada.
City officials signed a memorandum of understanding with the automaker, and they were ironing out a deal to assemble land for the project over the next 60 days.
If enough land is acquired and the tax incentives approved, construction is expected to start later this year and the first new vehicles could be in production by the end of 2020.
The automaker's injection of money and jobs into the Motor City contrasts sharply with news from rival General Motors Co., which announced plans to shutter its Detroit-Hamtramck plant next year and plans to close four others in the U.S. and Canada.
City officials insisted they would help bring those 5,000 new jobs to the city without displacing any residents. In the early 1980s, thousands of people were relocated and a black and Polish neighborhood known as Poletown was razed for what became GM's Detroit-Hamtramck plant.
Fiat Chrysler's massive, multi-layered investment calls to mind online retailer Amazon, which last year had more than 230 municipalities competing for its second headquarters and offering billions of dollars in inducements. Northern Virginia and New York ultimately won the competition, but Amazon recently canceled the New York project - and some 25,000 promised jobs - after running into fierce opposition to those incentives from lawmakers and political activists on the left.
Fiat Chrysler's industrial overture to the Detroit area is not the same, said Kristen Dziczek, of the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan. For the automaker, she said, it's akin to "investing with friends in Michigan they know very well." She noted that the city and state are likely to "come to the table with something good" because they see a realistic return on their investment. The city said it's offering $12 million in tax credits.
"You wouldn't find local opposition to this issue like in New York - people in Detroit and Michigan want auto jobs," Dziczek said. "(Fiat Chrysler) is not out there waving their dollars around saying, 'Who will give us the most incentives?' ... They weren't playing an incentive game. They were looking at a business case, and what makes sense."
Company officials said SUVs remain in demand, with strong sales and growth potential in domestic and overseas markets. The company's chief financial officer told investors in June that trucks and SUVs would account for 80 percent of revenue by 2022.
Union leaders also praised the announcement.
"It is especially exciting because these are good union jobs that have been achieved through collective bargaining," United Auto Workers Vice President Cindy Estrada said in a statement. "We now look forward to working with the city and other community leaders on a community benefits agreement that reimagines our city and empowers our citizens to create sustainable communities with long-term viability."
Detroit's history has long been intertwined with the U.S. auto industry, with its attendant peaks and valleys.
Historically, Detroit's job losses have been reflected in its plummeting population. About 1.8 million people lived in Detroit in the 1950s and Detroit was the nation's fourth-biggest city in 1960. By 2016, it would rank 21st as the tens of thousands of the middle class fled to the suburbs. More whites moved away following a riot in 1967. The black middle class made a similar exodus in the following decade.
About the same time, the car plants that provided jobs and helped keep the city running were hiring fewer people. Around 1970, Detroit's unemployment rate was just over 7 percent. It reached 25 percent by 1990. In 2009, the unemployment rate was close to 29 percent.
Today, Detroit has fewer than 700,000 residents. But the city's unemployment rate last fall was down to about 8 percent.
The Associated Press contributed to this report.