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FCA’s U.S. expansion stokes fears for Brampton

Dana Flavelle, Automotive News Canada
May 15, 2019

Fiat Chrysler Automobiles’ recent US $4.5 billion investment in new and existing assembly plants in Michigan will be a boon to Canadian parts suppliers, even as the automaker cuts production at its two facilities in Ontario, the president of the Automotive Parts Manufacturers’ Association said.

“Anytime someone invests in the Great Lakes region, it’s good for us,” Flavio Volpe told Automotive News Canada.

With Canadian parts makers already shipping most of their product into the United States, FCA’s plan could translate into $2 billion to $3 billion in new business per year, creating 3,000 more jobs in Canada, Volpe said.

But FCA’s decision to expand U.S. production has fuelled concerns about the future of the Brampton Assembly Plant in Ontario.

‘NOT ENCOURAGING’

For the Michigan blueprint, FCA would invest in three plants to create 6,500 jobs and boost production of current and new-model Ram trucks, a revived Jeep Wagoneer, the next-generation Jeep Grand Cherokee and future plug-in hybrid models.

“In theory, those models could have been assigned to Brampton,” said John Holmes, a professor emeritus at Queen’s University in Kingston, Ont., and co-author of a report titled The Future of the Canadian Auto industry.

“It’s not encouraging for Brampton in the sense that it’s taking those models out of the mix.”

FCA Canada said in an email the investment in Michigan “has no impact on its Canadian operations. As for Brampton Assembly, we don’t discuss future plans and products. However, the products built there have a very loyal and engaged customer base and remain an important part of our product portfolio in the United States and North America and will continue to be.”

In January at the North American International Auto Show in Detroit, FCA Canada President Reid Bigland told Automotive News Canada that the company remains committed to Brampton Assembly, although he acknowledged the passenger-car segment is under pressure.

The plant, which employs about 3,600 people on two shifts, makes the Chrysler 300 sedan, the Dodge Charger sedan and the two-door Dodge Challenger. Future FCA product will not use those cars’ aging platform, placing a question mark on what’s next for the plant once the current models run their course.

“We’ve been committed to Brampton for a long time, and we’re not looking to waver on our commitment to Brampton,” Bigland said.

At the Detroit auto show, FCA CEO Mike Manley hinted at an electric future and a new platform for the vehicles currently built there.

“The reality is those platforms and that technology we used does need to move on. They can’t exist as you get into the middle-2020s,” Manley said in a story published by The Detroit News. “New technology is going to drive a load of weight out, so we can think of the powertrains in a different way. And we can use electrification to really supplement those vehicles.”

JOLTED BY GM CLOSURE

Concerns about Brampton heightened after General Motors said it would shutter its Oshawa Assembly Plant at the end of the year, citing falling demand for passenger cars among its reasons. The plant produces the Chevrolet Imp and Cadillac XTS sedans.

GM has since said it will keep the plant open to produce aftermarket parts. It will also turn part of the property into a test track for autonomous vehicles.

“After GM Oshawa, we saw Chrysler Brampton as being the most vulnerable plant in Canada,” Holmes said. “The market has gone really soft for cars, especially for sedans.”

For now, the Brampton plant’s future seems assured even after FCA announced in March that it would idle both Brampton and Windsor assembly plants for two weeks in April and cut its third shift in Windsor in September to better align production with demand. The Windsor plant builds the Chrysler Pacifica and Dodge Grand Caravan minivans.

“There’s a big difference between what FCA announced in Windsor and what GM announced in Oshawa,” Volpe said.

“Currently, demand for the production Brampton is quite strong,” he said.

And while sale of the Pacifica and Grand Caravan minivans are struggling, FCA is not going to give up its leadership position in the segment, said Joe McCabe, CEO of U.S.-based forecasting and consulting firm AutoForecast Solutions.

While FCA Canada won’t comment on future product, McCabe said the automaker is planning to introduce an all-wheel-drive version of the Pacifica as well as an entry-level replacement for the Grand Caravan, which is currently built on a separate and older platform. The new vehicle, said McCabe, will be assembled on the Pacifica platform.

“The fact that they’re investing in all-wheel drive means they’re actually trying to take it another step up they’re not trying to pull away from their minivan strategy. If you consolidate that all on o platform … there’s potential for improving your manufacturing operations.”

 

Via: Automotive News Canada