Fiat Chrysler ups the ante as automakers
respond to Trump
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[January 09, 2017]
By Bernie Woodall and David Shepardson
DETROIT (Reuters) - Fiat Chrysler
Automobiles <FCHA.MI> <FCAU.N> on Sunday said it will invest $1 billion
to modernize two plants in the U.S. Midwest and create 2,000 jobs,
upping the ante as automakers respond to threats from President-elect
Donald Trump to slap new taxes on imported vehicles.
FCA's announcement that it would retool factories in Ohio and Michigan
to build new Jeep sport utility vehicles, including a pickup truck, and
potentially move production of a Ram heavy-duty pickup truck to Michigan
from Mexico, also highlighted the auto industry's keen interest in
getting relief from tough fuel economy rules enacted by the outgoing
General Motors Co <GM.N> Chief Executive Mary Barra on Sunday said tax
reform and "streamlining regulations ... are just two areas that would
be extremely beneficial" for Trump to address. Trump has criticized GM
for building cars in Mexico while laying off workers in the United
Barra, who is on an advisory committee to Trump, told reporters that
decisions about where to build specific vehicles are made "two, three
four years ago". Overall, she said of Trump, "we have much more in
common than we have different".
Barra had a conversation with Trump on Tuesday, a person briefed on the
call told Reuters. Barra declined to discuss her conversations with
Many automakers plan to use the annual North American International Auto
show in Detroit, which started on Saturday, to tout investments in the
United States and a commitment to U.S. employment against the backdrop
of Trump's criticism of automakers for shipping vehicles into the U.S.
Daimler AG <DAIGn.DE> Chief Executive Dieter Zetsche on Sunday said
during an auto show event that the German automaker plans to invest
another $1.3 billion to expand sport utility vehicle (SUV) production at
a factory in Alabama.
Automakers are girding for rounds of questions about Mexican investments
and U.S. jobs in the wake of Trump's harsh criticism of automakers.
Most of the major automakers in the U.S. have substantial vehicle making
operations in Mexico, as well as complex networks of parts makers that
supply their factories in the U.S. and support jobs and investment in
states such as Ohio and Michigan.
FCA's investment decisions were not related to Trump's recent attacks on
Ford Motor Co <F.N>, GM and Toyota Motor Corp <7203.T> for building cars
for the U.S. market in Mexico, people familiar with company's moves said
The company had already signaled plans to expand truck and SUV
production at its U.S. plants, and discontinued production of small and
medium-sized cars in two U.S. factories.
FCA executives did not confer with Trump before making the decision on
the new big SUVs and a Jeep pickup truck, according to a person familiar
with the company's thinking.
The same source said FCA CEO Sergio Marchionne wanted to get out the
news about adding jobs and investment in the United States in case the
company encounters more criticism from Trump.
Still, Fiat Chrysler's announcement landed as global auto industry
executives gathered for the annual auto show in a climate of growing
uncertainty about the trade and regulatory policies the new Republican
administration will pursue.
Trump, who will be inaugurated on Jan. 20, has talked about rolling back
environmental regulations, and supporting corporate tax cuts - moves
automakers would welcome.
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A Chrysler Warren Truck Assembly sign is seen in front of the Fiat
Chrysler Automobiles (FCA) plant in Warren, Michigan October 7,
2015. REUTERS/Rebecca Cook
He has just as explicitly warned that he will move to raise the
costs of importing vehicles from Mexico, a policy industry
executives said could hurt their businesses.
PLAYING UP U.S. INVESTMENTS
Since Trump's election, automakers and other companies have played
up their investments in the United States.
Last week, Ford scrapped plans to build a $1.6 billion plant in
Mexico and invest $700 million in a factory in Michigan. Ford will
still move production of Focus small cars to Mexico, but will
instead cut total production of the cars by consolidating their
assembly in an existing Mexican plant.
Hinrich Woebcken, chief executive of the North America Region for
German automaker Volkswagen AG <VOWG_p.DE>, told Reuters on Sunday
the automaker plans to invest $7 billion in the United States
between 2015 and 2019 and will start building its new Atlas SUV in
Tennessee later this year.
Volkswagen has had a plant in Mexico for 50 years and it is not
shifting any jobs to Mexico from the United States.
"We do not make our investment decisions based on administrative
cycles. Our business is really an 8-, 12-, 14-year horizon when we
look at investments," Woebcken said on the sidelines of the Detroit
FCA said a plant in Warren, Michigan, near Detroit, would make the
Jeep Wagoneer and Jeep Grand Wagoneer SUVs, while a Toledo, Ohio,
factory would produce the Jeep pickup.
The company said the production plans in Ohio and Michigan were
"subject to the negotiation and final approval of incentives by
state and local entities".
U.S. consumers have increasingly shifted toward SUVs and pickup
trucks and away from sedans in recent years, as gasoline prices have
remained relatively low.
A year ago, Marchionne said FCA would cease production of two sedans
and focus on SUVs and pickups.
Marchionne said in a statement on Sunday that the lineup changes
were due to that consumer shift.
"We continue to reinforce the U.S. as a global manufacturing hub"
for SUVs and pickup trucks, he added.
(Reporting by Nick Carey, David Shepardson and Bernie Woodall;
Editing by Alan Crosby, Lisa Von Ahn and Himani Sarkar)
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