Although the company is not expected to confirm the reports until next week, Fiat Chrysler Automobiles N.V. (NYSE: FCAU) is planning to reopen an engine plant the company closed in 2012 after refitting it to produce a new three-row seating version of the Jeep Grand Cherokee. Reopening the Mack Avenue Engine II plant could create up to 400 new jobs.
If FCA confirms the plans, the Mack II plant would be the first new auto industry assembly plant in 27 years to open in Detroit. The plant is expected to be ready in time to produce the new Jeep vehicle for the 2021 model year.
Last week General Motors announced that it is closing its Detroit-Hamtramck assembly plant by June of 2019 and shutting down other North American plants in Canada and the United States, with the loss of around 13,000 jobs. GM CEO Mary Barra has traveled to Washington, D.C., to speak to members of Michigan’s congressional delegation, who are united in their opposition to the closures.
FCA may have a jump on GM and Ford in their conversion to dumping slow-selling passenger cars and focusing on building sport utility vehicles and light trucks. The Jeep brand posted a sales increase of 12% year over year in November as sales of the new Cherokee rose 23% and Compass sales jumped 25%.
The company’s Ram pickups and other light trucks saw a sales jump of 44% in the month. For the first 11 months of the year, Ram has sold 529,173 light trucks, up 4% compared to 2017 sales for the same period.
LMC Automotive analyst Jeff Schuster told The Detroit News:
FCA is essentially out of capacity. They’re kind of running up against being against full capacity. This is a very different situation than what GM is dealing with.
In November, FCA’s North American assembly plants were running at 92% of capacity, and that’s following the company’s announced decision in 2016 to get out of the passenger car business and build more SUVs and pickups. By contrast, LMC Automotive reckons that GM is running at 72% of capacity and Ford at 81% in November.
When FCA’s Mack II plant starts production of the three-row Grand Cherokee, FCA would begin retooling Jefferson North Assembly Plant — directly across the street from the Mack Avenue Engine Complex — to make way for the next generation of the two- and three-row Grand Cherokee. The Jefferson North plant currently builds Jeep Grand Cherokee and Dodge Durango SUVs and is running at 130% of capacity, according to The Detroit News.
When GM’s Detroit-Hamtramck plant is shut down, FCA’s Jefferson North plant will be the only auto assembly plant located entirely within the Detroit city limits. That is until FCA launches production at the Mack II plant.