Late Thursday afternoon, Fiat Chrysler Automobiles N.V. (NYSE: FCAU) announced that it plans to invest more than $1 billion to modernize the Warren, Michigan, assembly plant to produce the next generation of Ram Heavy Duty trucks. The move from Saltillo, Mexico, will take place in 2020.
FCA said that the move will create 2,500 new jobs at the plant, on top of 2,000 new jobs the company announced in January last year as it tools up to build more pickups and sport utility vehicles in U.S. plants.
In the same press release, FCA said it would make a special bonus payment of $2,000 to about 60,000 hourly and salaried U.S. employees. The payment will be made in the second quarter and is being paid in addition to profit-sharing or performance bonus payments.
FCA CEO Sergio Marchionne said:
These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA’s success. It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly.
FCA, like Ford and GM, will soon announce profit-sharing bonuses for hourly employees. These payments could easily exceed $5,000 per employee, according to The Wall Street Journal.
Mexico’s auto industry association reported that the country exported more than 276,000 Ram Heavy Duty trucks in 2017, with nearly 90% coming to the United States. The Saltillo plant will be altered to produce commercial vehicles for the global market, according to FCA.
Moving Ram Heavy Duty production to Michigan mitigates somewhat the risk of auto industry-unfavorable changes that President Trump has pushed for in the North American Free Trade Agreement (NAFTA).
FCA’s shares traded up about 1.3% Friday morning to $23.72, after posting a gain of about 7.2% on Thursday to close at $23.42 after posting a new 52-week high of $23.44. The stock’s 52-week low is $9.46, and the 12-month consensus price target is $24.02.