Fiat Chrysler to Invest $2 Billion on Next Minivan, Seeks to End Two-Tier Wages

Fiat Chrysler Automobiles is in the midst of investing $2 billion to develop its next-generation minivan, will invest more in its two plants in Mexico and will make a decision on where to make the Jeep Wrangler this year, Fiat Chrysler CEO Sergio Marchionne said Monday.

Marchionne’s comments, made at the North American International Auto Show in Detroit, come as the automaker, along with General Motors and Chrysler, prepares for contract talks with the UAW.

Marchionne reiterated his view that automakers need to find a way to eliminate the two-tier wage structure for hourly workers.

“We need to find a way to make that go away,” Marchionne said. “And the best way to do it is to grandfather the old ones. Freeze them. And get everybody else on a tier two.”

The UAW agreed to a lower, entry-level wage for newly hired workers in 2007. Workers hired for the Detroit Three start at about $15 per hour while long-time workers earn, on average, about $28 per hour.

Last month, UAW President Dennis Williams vowed to push for a wage increase for legacy workers while also trying to close the pay gap between the two classes of workers in this year’s contract talks.

Marchionne also said that the automaker plans to reveal its long-awaited, next-generation Town & Country minivan at the Detroit auto show next January. The automaker is in the process of spending $2 billion to develop that minivan and to retool its Windsor Assembly Plant.

“It is my sincere hope that you will see it on the stand here next year,” said Marchionne.

Marchionne also said that the “natural” place to build a mid-size crossover that will be built on the same platform as the minivan would also be the Windsor Assembly Plant, “once we determine whether we will build it or not.”

Fiat Chrysler has already started to retool the Windsor Assembly Plant and has committed to making the minivan there, but did not reveal the level of investment until Monday. In Windsor, there were concerns that Fiat Chrysler was going to limit its minivan investment because discussions over an incentive package with government officials collapsed.

Meanwhile, in Toledo, Ohio, workers who build the Jeep Wrangler are worried that Fiat Chrysler will move production of the 2017 SUV to another plant. Marchionne has said that the company may build that SUV with an aluminum frame and that the expense of retooling the Toledo plant would be more than the cost of moving it to another plant.

The Wrangler is built at a plant in Toledo in a joint venture with Kuka, Hyundai Mobis and other suppliers. The plant was originally designed to build just 120,000 annually.

“The Wrangler is not a normal production vehicle because of the fact that we brought other parties to the supplier park,” Marchionne said. “The lack of unification has really posed some limitations of what can happen at that structure moving forward.”

Marchionne said he plans to meet Ohio Gov. John Kaisch and Toledo Mayor Michael Collins soon to discuss the company’s plans there.

Marchionne said he will heavily weigh the historic commitment that workers in Toledo have made to making the Wrangler, which traces its history back to the 1940s.

Last year, more than half of the 1 million Jeeps sold worldwide were made in Toledo.

“We are going to take a very hard look at this without ignoring what these guys have done,” Marchionne said. “We owe them something.”

Marchionne also said the automaker will make a decision about investments at its plants in Mexico later this year. Fiat Chrysler operates two plants in Mexico – one in Toluca and one in Saltillo.

“We are relatively close to making decisions … that would increase head counts at both of those plants,” Marchionne said.

This article appeared in print in the January 13th, 2015 edition of Hamodia.