Breaking down FCA’s new investments, tax incentives in Mich.

DETROIT — Michigan Gov. Gretchen Whitmer touted Fiat Chrysler Automobiles’ $ 4.5 billion investment in five manufacturing operations in the Detroit area as “the biggest automotive assembly plant deal in the United States in a decade.”

It also was arguably the most complex, at least as business development deals go in Michigan.

The deal entailed not only wooing the automaker with state tax incentives, but also the city of Detroit going to extraordinary lengths to assemble 215 acres of both private and publicly owned land — in less than 90 days since FCA announced its homestate investment.

All told, FCA will get at least $ 319 million in various taxpayer incentives, including tax breaks, land, loans, employee recruitment and job-training and cash grants.

Here’s how the investment and incentives breaks down at all five FCA manufacturing sites:

Detroit: Mack Avenue and Jefferson North

The Mack Avenue project is the centerpiece of FCA’s $ 2.5 billion investment in Detroit.

The transnational automaker will fuse together two engine plants and convert them into an assembly plant — the first new plant in Detroit since Chrysler’s Jefferson North Assembly Plant came online in 1992.

FCA plans to spend $ 1.6 billion on the Mack Avenue project. The new assembly plant will build a new three-row Jeep SUV and Jeep’s next-generation Grand Cherokee.

The Mack plant will get 3,850 new jobs — with Detroiters getting first priority.

At Jefferson North, or JNAP in industry lingo, FCA will add 1,100 new jobs and invest $ 901 million modernizing and retooling that plant for assembly of the new Grand Cherokee.

Taxpayer subsidies and incentives for these two projects include:

  • $ 99 million Good Jobs for Michigan tax incentive of 100 percent state income tax capture for up to 10 years on new jobs with an average annual wage of $ 59,846.
  • $ 50.6 million in land around the two plants acquired by the City of Detroit and to be given to FCA.
  • $ 35 million grant to the Detroit Brownfield Redevelopment Authority (DRBA) for land assemblage and site clearing around the two plants.
  • $ 20 million loan from Michigan Strategic Fund’s Investment Fund to DBRA to be repaid through tax-increment revenues generated at the Mack Avenue site.
  • $ 29.3 million in tax abatements under the state’s Industrial Facilities Exemption.
  • $ 18 million State Essential Services Assessment (SESA) tax exemption for 15 years at Mack Avenue.
  • $ 13.5 million SESA tax exemption for 15 years at Jefferson North.
  • $ 10 million Michigan Business Development Program performance-based grant from the Michigan Strategic Fund.
  • $ 7.5 million loan from the city of Detroit to DBRA that also will be repaid through tax-increment revenues collected on the Mack Avenue property.
  • $ 6.3 million from the state’s Talent Investment Agency for worker recruitment and training.
  • $ 2 million grant from the Michigan Department of Environment, Great Lakes and Energy (EGLE) for environmental cleanup.
  • Total incentives: $ 291.2 million

Warren

FCA plans to invest nearly $ 1.5 billion retooling and expanding the Warren Truck Assembly Plant for production of the all-new Jeep Wagoneer and Grand Wagoneer, adding 500,000 square feet of plant space to the 3 million-square-foot facility originally built in 1938 on 87 acres at Eight Mile and Mound roads.

At the adjacent Warren Stamping Plant, FCA will spend $ 236.2 million on technology and machinery upgrades to increase output at the 2 million-square-foot plant built in 1948 on 78 acres at Mound and 9 Mile roads.

Taxpayer subsidies and incentives for these two projects include:

  •  $ 21 million in State Essential Services Assessment tax exemption for 15 years at Warren Truck.
  •  $ 6 million Good Jobs for Michigan tax incentive of 50 percent state income tax capture for up five years at Warren Truck on qualified jobs with wages averages $ 60,701 annually.
  •  $ 692,928 State Essential Services Assessment tax exemption for five years at Warren Stamping Plant.
  • FCA also is seeking an unspecified personal property tax abatement from the city of Warren for its Warren Truck Asssembly Plant project, according to Whitmer’s office.
  • Total incentives: $ 27.7 million

Sterling Heights and Dundee

FCA plans to invest $ 169.3 million at its 54-year-old Sterling Stamping Plant on Van Dyke Avenue in Sterling Heights.

The automaker will get a five-year Alternate State Essential Services Assessment tax exemption valued at $ 180,900 for that capital investment in the 2.7-million-square-foot facility that sits on 254 acres.

Total incentives: $ 180,900

Since FCA is converting Mack Engine Plant I into an assembly plant, the company will cease assembly of its Pentastar engines at the facility in the third quarter of this year and shift that production to its Dundee Engine Plant in Monroe County.

FCA estimates it will spend $ 119 million moving the Pentastar engine production to the Dundee complex.

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Section Page News – Automotive News

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