Chrysle’s plan to crank out more trucks, crossovers and SUVs in North American markets might negatively affect tDarren Calabrese/The Canadian Press
There are no new North American assembly plants on the drawing boards of Fiat Chrysler Automobiles NV – a development that probably represents good news for the future of the auto maker's assembly plant in Brampton, Ont.
FCA will restructure its North American manufacturing operations so that it cranks out more trucks, crossovers and SUVs, in what chief executive officer Sergio Marchionne said is a "permanent shift" in the Canadian and U.S. markets away from passenger cars owing to tumbling gasoline prices.
"And we've seen, certainly in terms of our ability to meet market demand, some severe restriction in terms of the dexterity of our manufacturing system to accomplish that end," Mr. Marchionne said on a conference call Wednesday.
As a result, he said, the company's manufacturing operations will "defocus" on passenger cars and produce more Ram pickup trucks and Jeep sport utilities and crossovers.
"There are two cars in particular, the Dodge Dart and the Chrysler 200, which will run their course," he said as FCA presented a new 2018 outlook. The outlook calls for the Italian-American auto maker as a whole to be debt-free by 2018, but scales back the number of products originally scheduled to be produced for its Alfa Romeo luxury brand.
FCA will talk with potential partners about assembling replacements for those cars in the compact and mid-sized segments respectively, he said.
Pickups and utility vehicles are more profitable to sell than cars so some auto makers have been shifting production of passenger cars from U.S. and Canadian assembly plants to Mexico and other low-cost locations.
A shift away from passenger cars might appear to have negative implications for the Brampton plant, which assembles the Dodge Challenger, Dodge Charger and Chrysler 300 cars, but they are full-sized sedans that sold relatively well in the United States and Canada last year as gas prices tumbled.
The future of the Brampton plant and new investment in the factory will be key issues in contract negotiations later this year between FCA and Unifor, which represents workers there and at the company's minivan assembly plant in Windsor, Ont.
"If there is any concern in the Chrysler chain, it's with Brampton," Unifor president Jerry Dias said Wednesday. "Ultimately for us, it's going to be about solidifying Brampton. Our priority is solidifying the Canadian footprint for the long-term."
The revelation by FCA that it's not considering a new North American plant means Unifor likely won't be negotiating against the threat of moving production to Mexico or the U.S. South, he said.
The Brampton plant probably needs an investment in a new paint shop if it's going to win a mandate to build new vehicles, but FCA could simply extend production of the current cars, said industry analyst Joe McCabe, president of consulting firm AutoForecast Solutions LLC.
"From a vehicle footprint standpoint, Brampton we believe is safe," Mr. McCabe said.
Negotiations with Ford Motor Co. and General Motors Co., also taking place this year as part of the regular round of bargaining between Unifor and the Detroit Three auto makers, will also focus on plant investment.
The union is seeking investment in a Ford engine plant in Windsor that has no new products earmarked to replace the current engines. The future of GM's two assembly plants in Oshawa, Ont., is also in doubt because production of the vehicles made there is scheduled to end before 2020.