Toledo hurries incentives to keep Jeep's iconic SUV

TOLEDO, Ohio -- Fiat Chrysler Automobiles is studying a proposal from Toledo officials to roughly double the size of its cobbled-together Jeep Wrangler line here to about 3 million square feet.

City leaders presented an eight- to nine-figure offer late last month despite FCA CEO Sergio Marchionne's word that -- even if he did have to move Wrangler production -- none of the 1,700 people making the vehicle now would lose their jobs.

The proposal would, in theory, raise the annual Wrangler production capacity to an estimated 350,000 -- almost identical to the unibody Jeep Cherokee built on another line at FCA's Toledo Assembly Complex. Last year, the plant built 235,904 Wranglers.

The plan will likely address key production choke points that Marchionne has identified and enable the next-generation Wrangler to be built with a lightweight aluminum body.

Marchionne has said that FCA must soon decide on the production site of the next-generation Wrangler, scheduled to arrive in two years.

Marchionne's comments last fall that it would be prohibitively expensive to build an aluminum-bodied Wrangler in the Toledo plant set off a flurry of action, spurred not so much by the prospect of job losses as the city's pride in being the home of the Wrangler. Toledo officials also hope for new jobs if they can persuade suppliers to locate near the expanded plant.

In effect, Toledo has offered a princely sum to help Marchionne achieve what he says he wants to do: Keep the Wrangler in its home.

As a result, it appears increasingly likely that the Wrangler will remain in Toledo for the foreseeable future. There is no evidence that FCA is negotiating with any other state or municipality. FCA declined to comment last week.

So are Toledo taxpayers being played by the industry's consummate deal-maker?

Local leaders say no. They say that Jeep is at the heart of the city's identity and that the Wrangler's consistent sales provide economic stability. They also say that new jobs are likely to come from suppliers moving closer to a plant producing as many as 50 percent more Wranglers per year.

Will it be enough to meet global demand? Perhaps, but to be fair, when the current Wrangler line began production in 2006, it had an annual capacity of 120,000.

Toledo's Wrangler initiative began suddenly in October and came out of left field -- or more accurately, out of the Left Bank in Paris.

Marchionne was asked by Automotive News at the 2014 Paris auto show which of his two vows -- never to build another assembly plant in the United States and never to build a Wrangler outside Toledo -- he would be forced to break first?

The CEO's answer alarmed Toledo civic leaders: "If the solution is aluminum, then I think, unfortunately, Toledo is the wrong place, the wrong setup to try and build a Wrangler because it requires a complete reconfiguring of the assets that would be cost-prohibitive. I mean, it would be so outrageously expensive that it would be impossible to try and work out of that facility."

But Marchionne added that even if Wrangler production moved elsewhere, "there will be zero impact on head count and on employment levels" in Toledo.

That assurance did little to stem concern in Toledo.

"If that plant goes away, Lear goes away, Toledo Molding & Die goes away -- all of these other Tier 1, Tier 2 and Tier 3 suppliers that have fed that line for years go away," said Paul Toth, CEO of the Toledo-Lucas County Port Authority, the local economic development arm.

"Wrangler is so important to our psyche and to who we are as a community that everyone wanted to get involved," Toth said.

Heavily leveraged FCA would be hard-pressed to make a major investment in Toledo. In October it was relisted on the New York Stock Exchange, preparing a $2 billion overhaul of its minivans and spending $7 billion to relaunch Alfa Romeo globally.

Ohio Gov. John Kasich and then-Toledo Mayor, Michael Collins, arranged an emergency conference call with Marchionne two days after his pronouncement in Paris.

During the conference call, Marchionne learned that Toledo had for some time been assembling land near the plant in case FCA wanted to expand.

Marchionne's assurances in Paris about protecting Jeep jobs in Toledo put local economic development officials in the odd position of putting together an incentive package even though they had been told that no jobs would be lost.

Toth declined to discuss the city's proposal, which is still confidential. But he said that as a rule, "it's a lot easier to get creative, to get excited, to get aggressive with all new jobs," if an automaker such as Ford Motor Co. suddenly thought about building a plant in the region.

"But if we're going to go from 240,000 to 350,000 Jeeps, we think there will be some more jobs involved," Toth said.

The city's offer was shepherded by Collins and his head of economic development, Matt Sapara. Collins, 70, died Feb. 6 after suffering cardiac arrest while surveying the first hours of a massive snowstorm that struck Toledo on Feb. 1.

The offer likely allows for expansion of the land-locked Wrangler operation to the west and the elimination of choke points that Marchionne identified last month -- the small body shop and paint shop. Both are roughly half the size of those on the Cherokee side of the complex.

Production could continue during construction. When the work outside is done, the new portions could come online and the old portions could be converted and changed over for new Wrangler assembly in a shorter period, limiting production downtime.

When completed, the new Wrangler operation would be twice as big as its current 1.2 million square feet.

With the next-generation Wrangler due in early 2017, there is little time to build and tool a plant. There is even less time to begin negotiating with another municipality. Marchionne said in October that the company had plants in Michigan and Illinois with additional capacity.

The emotions that surround FCA's Wrangler decision go beyond simple business.

Speaking at the Automotive News World Congress last month, Marchionne drew spontaneous applause from an audience of auto and business executives when he said for the first time that he would prefer to keep the Wrangler in Toledo and would try harder to do so.

Bruce Baumhower, president of UAW Local 12, which represents hourly workers at the Toledo Assembly Complex, has been speaking to business and civic groups in the region for months to build support for the city's efforts to keep the Wrangler.

He said the initial emotional response to potentially losing the SUV to another plant has worn off, and he and his members are left to make the cold business case locally for keeping the Wrangler. That case centers on the stability that Wrangler production has given the area.

"I had a few people early on that asked me, 'What do you care what you build?' But Wrangler [and its predecessor] created economic stability for us for 75 years," Baumhower said.

Jeeps of one kind or another have been built in Toledo continuously since 1941, although the Wrangler's predecessor moved to Brampton, Ontatio, for a short period in the mid-1980s before returning.

"The Dodge Dakota came and left Toledo in three years. The Dodge Nitro came and left in four years. Even the Jeep Liberty only had a 10-year run. It's rare to have a product that has had a 75-year life," he said.

Baumhower said if the city is successful, the real opportunity for job growth in Toledo is likely to come more from suppliers who would move closer to feed as many as 700,000 Cherokees and Wranglers annually.

There are two large chunks -- including the 70-acre site of the now-demolished Jeep Parkway plant and 100 acres directly west of the plant -- of vacant industrial land within a few miles that would be convenient sites for suppliers, he said.

"I really think that everybody's in," Baumhower said. "I just can't imagine Toledo without the Jeep."