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$2.5 billion for Detroit: What’s FCA making?

by David Zatz on

There are thousands of Jeep Grand Cherokees on dealer and company lots, awaiting sales, all built in the current Jefferson North plant. Yet, the company is spending $1.6 billion on a new plant, which will include two current engine factories along Mack Avenue, and investing $901 million at the “plant next door” on Jefferson Avenue.

Mack Ave assembly plant rendering

Jefferson North will make the next-generation Grand Cherokee, while the huge new Mack Avenue assembly plant will make a three-row Jeep SUV (which many speculate is essentially a continuation of the Durango, not the body-on-frame Wagoneer) and the next generation Grand Cherokee. In short, there will be not one but two Grand Cherokee plants.

New Mack renderingRendering as viewed from a corner above the Jefferson North plant

The new Mack plant will be the first new assembly plant in Detroit since Conner Avenue started making Vipers in 1996, or, before that, since Jefferson North started making Jeeps in 1992.  The Mack Avenue plant alone will cost $1.6 billion and yield 3,850 jobs. The investment is being eased by $291 million in tax incentives and grants from Detroit and Michigan. Around $50.6 million of those incentives are in the form of land gathered up by Detroit, and another $35 million is from a Detroit authority for assembling and clearing land. (All the incentives are detailed in this article from the Michigan Economic Development Corporation.)

FCA is also spending around $119 million to move the Pentastar V-6 engine from Mack I into Dundee, a relatively new plant which is closer to Ann Arbor than Detroit. The company will put $1.5 billion into Warren Truck to make the Jeep Wagoneer and Grand Wagoneer, which are based on the Ram DT; Warren’s three million square feet of floor space will expand by another 500,000 square feet. This will include “electrified offerings.”

Signing an engine at Mack I

Another $236 million is going into Warren Stamping, down the road. Incentives for these projects are around $28 million, from Warren and Michigan.  Original story on grants and plans.

Analysis. Why would FCA need two Grand Cherokee plants? There are three possibilities one can speculate on. First, there could be a revolutionary new Grand Cherokee design, so appealing that more North Americans will want one, with fuel-efficient variants so it will be more successful as a “world car.”

There could also be contingency plans to build Rams in one of the plants, moving them up from Mexico; or to build other new vehicles, such as crossovers, alongside the Grand Cherokee (currently, the rumor mill sees one Charger/Challenger-based crossover, one Grand Commander-based crossover, one Pacifica-based crossover, and a production version of the Portal, which might be the same as the Pacifica-based crossover). One could even speculate on replacing the front-drive-based Cherokee with one on the same platform as the Grand Cherokee, since the Compass encroaches on Cherokee turf.

Chrysler has proven to be capable of a great deal of flexibility in its plants, so it’s possible to produce vehicles from different platforms—even front and rear wheel drive—as long as the vehicles all fit in the carriers and all points are within reach of the robot arms.

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