DETROIT -- Fiat Chrysler Automobiles is receiving packages of public incentives -- such as tax breaks, land, taxes generated by new jobs and grants, with a value of $319 million -- for $4.5 billion in investments at five manufacturing sites throughout southeast Michigan.
The Detroit City Council and the Michigan Strategic Fund's board voted separately Tuesday on the incentive packages tied to FCA's creation of more than 6,000 jobs across multiple plants, 4,950 of which will be in Detroit.
Of the $4.5 billion investment, about $2 billion is slated for the company's Warren, Sterling Heights and Dundee plants, creating 1,483 new jobs. The City of Warren will consider a personal property tax abatement in support of the Warren Truck Assembly Plant project.
The City of Detroit's blessing — with council members Raquel Castañeda-López, Mary Sheffield and Brenda Jones voting against key parts of the deal — paves the way for the automaker to invest $900 million at its 28-year-old Jefferson North Assembly Plant and $1.6 billion at its nearby Mack Avenue engine plants. One of the two Mack Engine plants has been idled since 2012.
"Today's announcement highlights the strong bet FCA is making on Michigan's talent, our manufacturing prowess and our leadership in new automotive technology, including electric and autonomous vehicles," Michigan Gov. Gretchen Whitmer said in statement released after the votes.
At the Warren, Mich., truck plant, which was built in 1938, FCA plans to spend nearly $1.5 billion to retool and add 500,000 square feet of space to build new Jeep Wagoneer and Grand Wagoneer SUVs, which are returning to the market for the 2021 model year after a 28-year hiatus.
"It's a tremendous investment to bring on a new car model, let alone [an] entire new plant, three new models and [to] revitalize another plant, in terms of the investment in people and the investment in infrastructure," said Mark Stewart, COO of FCA North America.
Jeff Mason, CEO of the Michigan Economic Development Corp., said the jobs FCA has promised to create will pay an average of $58,000 a year.
Christine Estereicher, director of state and local government affairs for FCA, said the automaker considered sites in Illinois and Mexico for the investment.
'Made the most sense'
"But at the end of the day, it really made the most sense for us to put that plant and invest in Michigan, the place that we call home," Estereicher told the Michigan Strategic Fund board during Tuesday's meeting in Lansing that took place about an hour after the City Council approved Detroit's portion of the deal.
The council's approval of land deals -- which Mayor Mike Duggan's administration engineered to assemble 215 acres of land around the Jefferson North and Mack Avenue plants -- will allow the company to convert its two Mack engine plants into the first new assembly plant in Detroit since the Jefferson North factory was built in the early 1990s.
The Michigan Strategic Fund board approved $223.5 million in taxpayer incentives for FCA's investments at Mack Avenue, Jefferson North, the Warren truck and stamping plants, the Sterling Stamping Plant and engine assembly plants in Dundee.
The $107.6 million land swap package secured deals with private landowners who have property needed for the project. The Morouns, a largely reclusive family who own the Ambassador Bridge that connects Detroit with Windsor, Ontario, are among the big winners in the deal, receiving $43.5 million and 117 acres of city land in exchange for an 82.2-acre former Budd Wheel plant.
After the council's vote, Duggan called it the best day of his term as mayor.
More supplier jobs
"Detroit was the city that built the middle class of America, and today, we started to rebuild the middle class in Detroit," the mayor told reporters. "It starts with 5,000 jobs, but we already have four more logistics centers and supplier parks for Chrysler that are going to be coming forward in the coming weeks with another 1,500 to 2,000 jobs."
Duggan declined to identify the automotive suppliers. He did shed some more light on his deal with the Morouns.
"I knew from day one that the biggest obstacle would be dealing with the Morouns," he said. "It was the biggest obstacle. We got it done."
Councilwoman Castañeda-López was forward-thinking in a different way. Following the vote, she called the city's "tunnel vision" amid media hype "unfortunate, but not surprising."
"Now is the monitoring piece" to make sure promises are kept, she added.
The council approved unanimously the $35.2 million community benefits agreement, which includes $5.4 million for demolition of 300 homes in the impacted area, $1.8 million in FCA grants for home repairs, $5.8 million in state funding for employment programs, $2 million for outreach and interview services and several other smaller funds to support neighborhood projects.
The council's Planning and Economic Development Committee last Thursday unanimously recommended that the city's land swap and incentives package be considered by the council. Duggan had said the city was on a tight deadline to finish the deal announced in February and that the project's construction timeline could be pushed back if the council did not approve the land swap deals.
Some council members expressed lingering concerns, worrying that the deal lined the pockets of wealthy landowners without including actionable policies that would allow Detroiters to fill the expected new jobs.
Jobs preference
FCA has promised that Detroit residents will be given preference for jobs, but only after the automaker's obligations to existing UAW members. Applications will open for Detroiters in August, a full month before they are widely available. Residents in the neighborhood of the plant will have a two-week jump on others. Jobs are expected to begin in late 2019 or early 2020.
To help Detroiters apply for jobs at the new assembly plant, the city plans to open five permanent work centers around the city, in addition to the three operating now.
F. Thomas Lewand Sr., Detroit's group executive for jobs and economic growth, last week called the complex deal the best possible outcome for Detroit, but he previously had reservations about parts of the agreement. On Tuesday, he supported the deal staunchly as council members grilled him.
"I don't think we left anything on the table," he said, echoing remarks from last week.
Lewand said last week that the proposed incentives from the city and the state were smaller than any incentives package made for similar projects around the country in the last 10 years. It equates to $57,172 invested per job created.
With all incentives approved, construction on the FCA plants could begin in the second quarter. Under the agreement with the city, FCA would have to start operations at the new plant no later than Dec. 1, 2022.
Like several other city lawmakers, Councilman Andre Spivey supported the deal because of the jobs.
"It's not the best deal, in my opinion," he said. "It's the best deal we have right now. But this is what we have. We have 5,000 jobs at our doorstep right now. I'm optimistic it will be a win-win for Detroit and FCA."
