Fiat Chrysler Automobiles' recent $4.5 billion investment in new and existing assembly plants in Michigan will be a boon to Canadian parts suppliers, even as the auto maker 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 said.
With Canadian parts makers already shipping most of their product into the U.S., FCA's plan could translate into $2 billion to $3 billion (Canada dollars) in new business per year, creating 3,000 more jobs in Canada, Volpe said.
But FCA's decision to expand U.S. production has fueled concerns about the future of the Brampton Assembly Plant in Ontario.
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 Detroit auto show, FCA Canada President Reid Bigland said 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.
Also at the Detroit auto show, FCA CEO Mike Manley hinted at an electric future and a new platform for the vehicles currently built there.
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 since has 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 auto maker 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 a platform ... there's potential for improving your manufacturing operations."