You’ve heard the yarn before: sedans bad! Crossovers/SUVs/trucks good! At least in current US-market trends. Customers are yearning for roomy, versatile vehicles and in doing so, is slowing killing cars in the U.S. This is forcing automakers like General Motors to restructure its business model and offerings as the overall automotive industry looks toward a decline in total sales. The Detroit automaker wants five “unallocated” plants next year—factories that build those low-selling, low margin sedans—including the Detroit-Hamtramck Assembly Plant. If GM gets its way and can close Detroit-Hamtramck and others, those employees may have luck finding a new job with GM’s crosstown rival Fiat Chrysler Automobiles.Â
The Detroit Free Press reported last week that several publications have reported and confirmed FCA’s plan to open a new assembly plant in the Motor City. According to the reports, FCA wants to retool its Mack Avenue Engine II plant into a vehicle assembly plant that will build the all-new three-row Jeep Grand Cherokee. The Mack Avenue Engine II plant closed in 2012.Â
The news that FCA has to open a new production facility while GM is proposing to close five doesn’t look good on the six o’clock news. However, there is a fundamental difference between FCA and GM in the U.S. FCA produces zero sedans in the U.S. and even then, the automaker only has three—the Dodge Charger and Challenger, and the Chrysler 300, which are built in Ontario, Canada at the company’s Brampton Assembly.Â
Comparing FCA’s announcement with GM’s is unfair. GM produces more car models than its competitor, which is finding massive success with its Jeep and Ram brands unlike anything before. FCA doesn’t have the capacity in the U.S. to meet demand. GM has unused capacity, hence the proposed closures, which have to be negotiated with the United Auto Workers union. While the loss of any job is devastating, affected Detroit-Hamtramck employees could find reprieve with FCA, which plans to begin production of the three-row Cherokee by the end of 2020.Â
Comments
SUV’s suck
Let’s see if I got this right. GMpays Fiat a ton of money for a piece of the company. GM pays Fiat a ton of money to get out of the deal. Fiat buys Chrysler. FCA doing better in the US than GM. Am I close?
Wonder why GM won’t sell a plant to FCA instead of building a whole new facility?
I agree, or at least share one with another automaker. FCA wants to build a midsize Ram truck, but even with the new assembly plant in Detroit, they will not have enough capacity to do so. Why not share Hamtramck with GM? FCA could build their midsize truck there, and GM could build the Chevy Trailblazer and a GMC version to compete with Bronco?
I guess at the end of the day, GM feels that if they cannot profit from their plants, nobody else should be able to as well and it is better to lay people off and destroy the economies of the respective communities.
FCA is repurposing an existing plant, not building a new one. The cost to buy and then convert Hamtramck would be more than converting an existing facility.
That said, nice to see it isn’t going to Mexico.
GM needs (probably) brand new plants, more automated, like Tesla builds, if they want to compete. I suspect that if they can’t get a good deal here in the states they will go elsewhere.
Hamtramck *is* a new plant, comparatively speaking. It’s of the same era as FCA’s Jefferson North plant anyhow. GM demolished the old Dodge Brothers auto plant, as well as an entire residential neighborhood, to build it. As for the notion of GM selling it to FCA (which has capacity problems), well, Chrysler sold it to GM back when they abandoned the old Dodge Brothers plant, so it wouldn’t be unheard of. FCA’s regretting closing and selling off so many plants back in 2009, it’s caused capacity problems for pretty much everything they build. They’ve had to delay introductions of several models because they lacked a place to build them, they had to discontinue the production of their almost new Chrysler 200 sedan not only because it was a poor seller but because they needed the plant in order to build Cherokees because they needed the plant that was building Cherokees in order to build the new model of the Jeep Wrangler, which in turn was introduced two years after it was supposed to be introduced because the Cherokee production had to be moved out of the plant first before it could be retooled. Hamtramck would be greatly appreciated by FCA, if GM could bear to part with it…
BTW, Mack North is basically going to be used for only part of the assembly process of the new Grand Cherokees. The majority of the vehicle is going to be built at the existing Jefferson North facility, and then only the three-row models will be carted north to Mack North to finish being assembled as three-row models. Mack North is too small to be an entire auto assembly plant. This is an act of desperation on FCA’s part, on par with AMC selling so many Ramblers in the early 1960’s that out of desperation they bought an old mattress plant on the Kenosha waterfront to build the bodies, which they then carted north to the main Kenosha assembly plant. That old mattress plant was never well suited for building cars, and neither is Mack North, but it’s what they could afford…
Don’t forget GM spend over $1Billion upgrading the plant in recent years, and were in the process of adding a new paint shop to the plant this summer when some idiot at the Ren-Cen pulled the plug.
I think the new FCA plant in Detroit will be a bit more than a trim-out facility. From what I can gather, a new paint shop is being built south of the plant, and that engine work done at Mack I will be moved to Trenton to allow for a new body shop.
Nevertheless, he Det-Ham situation is a real tragedy. The city of Detroit was showing some upward trajectory with the new FCA plant, and along comes Machete Mary with her wrecking ball to derail things.
Hmm, if FCA move the Pentastar line to Trenton North, where they could probably cram it in, I guess they have the floor space and capacity to do what you say at FCA Mack, especially since Saltillo is actually coming close to being as productive as the American plants. Of course at Trenton they’ll have to fix the roof first, and clean out the six inches of rat droppings in the part of the plant that has been mothballed for the past ten years, and get the HVAC working again. That’s an *old* building, not like Trenton South, which is fairly recent, and North went through a lot of Chrysler’s lean times where maintenance wasn’t a priority. There’s a reason you don’t see interior photos of that plant on Chrysler’s web site, unlike Trenton South!
As you mention, shutting down Hamtramck makes no sense. That’s one of GM’s most productive and flexible and modern plants. It was designed from the beginning to be flexible, unlike other plants whose floor plan and layout aren’t conducive to changes in production techniques or methodology. Most auto plants have some quirks that render them less than ideal for making cars, due to location, age, or just poor planning. Hamtramck really doesn’t. You take a dozen architects specializing in industrial design and ask them to design the ideal auto plant, whatever they come up with looks a whole lot like Hamtramck.