$1.49 billion is what Fiat Chrysler Automobiles NV (NYSE:FCAU) will be using to revamp its Sterling Heights Assembly Plant in Michigan. The automaker says that it is moving in haste to make the plant ready for the building of the next-generation Ram 1500 pickup truck. The current production of the Chrysler 200 mid-sized sedan is expected to come to an end in December. The sale of the next-generation Ram will pick immediately after that according to FCA CEO Sergio Marchionne.
FCA made public its investment plans after the approval of $11.38 million tax break by Michigan Strategic Fund board which will enable the automaker to secure its 15-year period commitment. Apparently, the plant ha been blacklisted for closure in 2009, a time when the automaker was struggling with Chapter 11 bankruptcy protection. However, it was never shut. Macomb County Executive, Mark Hackel has applauded FCA’s decision to invest in the plant which Sterling Heights Mayor Michael Taylor says is the largest one-time sort of investment in the City’s history.
Why has the automaker chosen on Sterling Heights for Ram production?
According to Taylor, Sterling Heights is an epicenter of economic development in the Metro Detroit region. The decision to use it for the building of the next-generation Ram was arrived at after several months of study. Other considerations were to have the Ram in Toledo and Belvidere, but Sterling Heights won the bill.
It is expected that FCA will present to the Sterling Heights City Council several different requests for tax breaks in the coming months estimated to be between $11 million to $12 million. CEO of Bonner Advisory Group who is also the city’s senior economic development adviser, Luke Bonner says that the approval of the requests is very vital to the automaker’s project.
FCA has more to offer in the coming months
There is a tentative plan to replace the Ram 1500 at Warren plant with the Jeep Wagoneer whose launch is likely to take place in 2018. Jeep Cherokee may also be moved from Toledo to Belvidere to boost its production. Both Toledo and Belvidere which are projected to create over 1000 new jobs will be receiving a $1 billion investment enhancement. So far, FCA has spent more than $8.3 billion on its U.S plants, and word has it that much more is the lineup.