USA - FCA US LLC announces a large investment and a significant number of new products for the Jeep brand.

FCA US Expands Jeep_® Product Lineup, Adding Jeep Wagoneer, Grand Wagoneer, and a Jeep Pickup Truck; Makes Further Commitment to U.S. Manufacturing With $1 Billion in New Investment and 2,000 New Jobs

• Announcement is a continuation of the efforts already underway to increase production capacity in the U.S. on trucks and SUVs to match demand
• Confirms addition of new models to award-winning Jeep® lineup – a Jeep pickup truck and the storied Jeep Wagoneer and Grand Wagoneer
• Investment includes retooling and modernization at Warren, Michigan, and Toledo, Ohio, plants; creates additional 2,000 American jobs
• Total U.S. committed investment grows to more than $9.6 billion since 2009, with 25,000 jobs created to date
• Production moves solidify U.S. as the global manufacturing hub for the flagship Jeep products

FCA US today confirmed the next phase of its industrialization plan by announcing a total $1 billion investment in plants in Michigan and Ohio, and the addition of 2,000 new American jobs. 

Consistent and combined with previously announced investments, FCA US is further demonstrating its commitment to strengthening its U.S. manufacturing base, and aligning U.S. capacity to extend the Jeep_® product lineup. 

In total, FCA US has committed investments of more than $9.6 billion in its U.S. manufacturing facilities and created 25,000 new jobs to date since 2009.

EXISTING MODEL RANGE

Today’s announcement is the second phase of an industrialization plan announced in January 2016. The plan called for the realignment of the Company’s U.S. manufacturing operations to fully utilize available capacity to respond to a shift in market demand for trucks and SUVs, and to further expand the Jeep and Ram brands.

With the $1 billion investment, FCA US will retool and modernize the Warren Truck Assembly Plant (Michigan) to produce the all-new Jeep Wagoneer and Grand Wagoneer, and the south plant of the Toledo Assembly Complex (Ohio) to build an all-new Jeep pickup truck. These actions are planned to be completed by 2020. More than 2,000 jobs also will be added to support production of these models. The added benefit of the investment in Warren is that it will enable the plant to produce the Ram heavy duty truck, which is currently produced in Mexico.

“The conversion of our industrial footprint completes this stage of our transformation as we respond to the shift in consumer tastes to trucks and SUVs, and as we continue to reinforce the U.S. as a global manufacturing hub for those vehicles at the heart of the SUV and truck market,” said Sergio Marchionne, Chief Executive Officer of FCA N.V. “These moves, which have been under discussion with Dennis Williams and the rest of the UAW leadership for some time, expand our capacity in these key segments, enabling us to meet growing demand here in the U.S., but more importantly to increase exports of our mid-size and larger vehicles to international markets.

“The expansion of our Jeep lineup has been and continues to be the key pillar of our strategy. Our commitment to internationalize the Jeep brand is unwavering, and with these last moves, 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. In addition, these all-new products will reach new consumers, as well as those that have been part of the Jeep tradition,” said Marchionne.

The actions announced today are subject to the negotiation and final approval of incentives by state and local entities.

Previously Announced Actions

In July 2016, the Company made two announcements involving production shifts at three plants to gain additional capacity for the Jeep Wrangler, Jeep Cherokee and Ram Light Duty Truck.

The first announcement confirmed a more than $1 billion investment and the addition of 1,000 jobs at its Illinois and Ohio plants. The Company will invest $350 million in the Belvidere Assembly Plant (Illinois) to produce the Jeep Cherokee, which will move from its current production location in Toledo, Ohio, in 2017. Approximately 300 new jobs would be created.

Following the move of Cherokee to Belvidere, the Company will invest $700 million in the Toledo Assembly Complex (Ohio) to retool the North plant to produce the next generation Jeep Wrangler. Approximately 700 new jobs will be added.

In the second announcement, FCA US announced that it will invest nearly $1.5 billion in its Sterling Heights Assembly Plant (Michigan) to retool it to build the next generation Ram 1500. In September, the Company committed to adding 700 new jobs to support production.

New Jeep Wrangler will not go down the all Aluminium route like the Ford F-Series Pick-Up.

The next-generation Jeep Wrangler won't follow the 2015 Ford F-150's lead with an aluminum body. Instead, the off-roader will keep its steel body structure but add aluminum doors, fenders and other parts after Fiat Chrysler CEO Sergio Marchionne said last week that the costs of the switch outweigh the benefits.

"We've run the numbers and we've simulated mileage and the impact. Because of the difference in cost not just of the material but the actual assembly process, I think we can do almost as well without doing it all aluminum," Marchionne said.

It's a stark reversal for the man who acknowledged a year ago that there was no better vehicle in FCA's lineup to make from aluminum than the Wrangler. Internal sources with direct knowledge had told Automotive News that the next-generation Wrangler would have an aluminum body.

Now, instead of following Ford Motor Co.'s expensive switch from steel for the F-150, Wrangler will follow General Motors' lead of using aluminum strategically to minimize costs.

GM decided against an aluminum body for the latest redesign of the Chevrolet Silverado and GMC Sierra pickups last year. Ford spent $359 million and lost about two months of production at one plant converting its pickup plant in Dearborn, Mich., to aluminum.

The development is likely great news for Toledo, Ohio, which has been vying to keep the Wrangler in its ancestral home. A steel body means that the Wrangler plant won't have to be gutted to switch to aluminum body construction.

The redesigned Wrangler, due in 2017, still has to lose weight to get better fuel economy than its current rating of up to 21 mpg highway. It will do so by "hanging" lightweight aluminum doors and other panels on a steel structure, Marchionne said.

"It may go beyond hanging, but it's not phenomenally off hanging," Marchionne explained about the latest plans for the 2018 Wrangler.

Even if the Toledo plant can be used without massive retooling, capacity constraints still pose a potential problem. The FCA CEO said he still expects to make a final decision about expanding Wrangler production in Toledo within two months.

The Wrangler's 2014 sales reached a record 175,328 in the U.S., its largest market, and through April are up another 22 percent.

Toledo and Ohio have offered FCA an incentive package to expand Wrangler production locally. Toledo has acquired a large tract of land west of the plant for possible expansion of Wrangler production.

Marchionne's Wrangler reversal could be seen as a solid save for the steel industry.

Ford's sales success with the aluminum 2015 F-150 masked the fact that the changeover, which shed more than 700 pounds on some models with an aluminum body and inspired other structural changes, produced solid but modest improvements in fuel economy.

The 2015 F-150 achieves up to 26 mpg on the highway vs. a maximum highway rating of 23 for the 2014 model.

But Marchionne's main concern may be the production disruption and expense of switching the Wrangler plant to aluminum production.

Unlike Ford, which has two plants producing the F-150, FCA has only one plant in the world producing the Wrangler: Toledo Assembly complex.

Ford continued operating its Kansas City, Mo., plant while it switched its Dearborn factory to aluminum to keep the supply of F-150s flowing to dealers -- and profits flowing to its bottom line.

For FCA, shutting down Wrangler production would mean an immediate shortage and lost sales of one of its most profitable vehicles.

Also, Ford at its two F-150 plants replaced steel welding equipment with tools that assemble the pickup with rivets and adhesive.

But while Marchionne said that the next Wrangler's body won't be aluminum, he implied last week that the coming Jeep Grand Wagoneer's would be.

He said a different cost and benefit calculation regarding aluminum will apply to the full-size Grand Wagoneer.

The Grand Wagoneer will be a unibody SUV with three rows of seats and will share a platform and factory with the two-row Grand Cherokee. The Grand Wagoneer is due to arrive in 2018.

Marchionne said, however, that the Grand Wagoneer's development might mean a one-year delay in the redesign of the Grand Cherokee, which had been due in 2017.

"I think that development [of the Grand Wagoneer] needs to coincide with a complete relook at the Grand Cherokee architecture and effectively jointly develop them. And if there is a delay [in the Grand Cherokee], it's due to the joining of these two programs into something that makes sense," Marchionne said.

The Grand Wagoneer, he said, "needs to happen. There's a piece of the market that I think we have not accessed because of the nature of that [current Grand Cherokee] architecture and what it can offer," the CEO said. "I think we need to go there with the next version."

Larry P. Vellequette

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