Fiat Chrysler Automobiles plans to convert an idled engine plant in Detroit into an assembly plant as part of plans to add a new three-row Jeep SUV to its lineup, the Detroit News reported.
The paper, citing multiple sources, said the automaker would revive Mack Avenue Engine II, idled since 2012, as an assembly plant building a new three-row Jeep Grand Cherokee for model year 2021, adding 400 new jobs.
This would be the first new vehicle assembly line to open in Detroit in 27 years, cushioning the blow of General Motors' plans to stop production of four sedans at Detroit-Hamtramck assembly plant by 1 June.
The Detroit News noted FCA's plans are the latest move by automakers in the waning days of the year before Detroit automakers begin to renegotiate their contracts next year with the United Auto Workers union.
The report said when Mack II 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. A public announcement was scheduled tentatively for the end of next week.
Both an FCA spokeswoman and the office of Detroit mayor Mike Duggan declined to comment to the Detroit News.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
"FCA is essentially out of capacity," Jeff Schuster, an analyst with LMC Automotive in Troy, told the paper. "They're kind of running up against being against full capacity. This is a very different situation than what GM is dealing with."
Fiat Chrysler's North American assembly plants are currently running at 92% capacity, according to data compiled by LMC Automotive for the Detroit News. By comparison, GM and Ford were operating at 72% and 81% through November, respectively.
But FCA's Jefferson North plant is operating at 130% capacity, the report said. That means the automaker is running extra shifts to meet demand for the Jeep Grand Cherokees, Jeep Grand Cherokee SRTs and Dodge Durangos made there.
Only two of Fiat Chrysler's US assembly plants are operating at below 80% capacity in 2018, the paper said, the Toledo Supplier Park and Warren Truck Plant. Currently building only the Ram 1500 work truck, Warren is operating at just 46% of capacity.
The paper said construction on Mack II, internally dubbed 'Plant X', likely would begin next year, as Detroit's automakers prepare to begin national contract talks with the UAW. To convert the old engine plant to a full assembly line, the paper's sources said, the automaker would need to add at least a body and paint shop.
The new production line on Mack Avenue would also add a valuable new three-row product to Fiat Chrysler's hot-selling Jeep lineup. The revamped line is expected to add hundreds of new jobs on Detroit's east side and to bolster the city's tax base.
The Detroit News noted Jefferson North, the last remaining automotive assembly plant located entirely inside Detroit's borders, completed construction in 1991 and produced its first Grand Cherokee in January 1992. GM opened Detroit-Hamtramck Assembly in 1985, after the city used eminent domain powers to seize a predominantly Polish neighborhood for the car plant.