While FCA plans on boosting the output of its Mexican plant in 2018 & 2019, in 2020 having shifted the production of its Ram heavy duty pickup trucks, it plans on reconditioning the plant to produce a yet to be named commercial vehicle.
In a development that marks a strategic shift in its plans, Fiat Chrysler Automobiles stated it will relocate the production of its Ram heavy-duty pickup trucks from Mexico to Michigan in 2020.
The move reduces its profile from NAFTA should U.S. President Donald Trump decide to pull out of the accord.
Fiat Chrysler said moving the plant to Warren, Michigan, near Detroit, would create 2,500 jobs.
The carmaker also plans on investing $1 billion in the facility.
As for its Mexican plant, it will be “repurposed to produce future commercial vehicles” for sale in global markets.
Mexico has free trade agreements with numerous countries.
Nearly a year ago, Sergio Marchionne, Fiat Chrysler’s CEO had raised the possibility of the firm moving the production of its heavy-duty pickups to the United States, saying the trade policy of the United States would go a long way to influence its decision on the matter.
If Trump decides to take the U.S. out of NAFTA, it would mean that automakers would have to pay a 25% duty on pickup trucks assembled in Mexico and shipped to the United States.
As per the company’s officials, almost 90% of its Ram heavy-duty pickups that are manufactured in in Saltillo plant in Mexico are shipped to the States or Canada.
The next round of negotiations in the NAFTA talks are scheduled to be held later this month, with Canadian officials saying earlier this week, that they are convinced that Trump intends to announce his intention to take the U.S. out of the agreement.
According to data available from the Mexican government, Fiat Chrysler had raised output levels in its Mexico plant by 39% in 2017 to 639,000 vehicles, which amounted to it being the third-largest producer of vehicles in Mexico for that year, behind Nissan Motor Co and General Motors Co.
The U.S. and Canada are the principal markets for full-size heavy-duty pickup trucks.
As per Miguel Ceballos, FCA’s spokesman for Mexico, the automaker expects even more growth in Mexico for 2018 & 2019. Once it stops producing the Ram Heavy Duty pickups in the country, it will start producing new commercial vehicle, “which still does not have a name”.
He went on to add, “It is going to be for global distribution, at the moment the Ram is only distributed at the level of NAFTA”.
Ceballos also mentioned that there was no current plan to either reduce or grow the workforce in Mexico.
Incidentally, GM has been preparing to construct a plant in Silao, Mexico, for its new generation large pickup trucks.
On Thursday, FCA stated it would make a special bonus payment of $2,000 to nearly 60,000 FCA hourly and salaried employees in the U.S., totaling around $120 million.
Typically, U.S. automakers only pay bonuses to hourly workers as part of collective bargaining agreements.