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While analysts predict a drop in auto sales in the United States this year and next year, Fiat Chrysler Automobiles believes the time has come for expansion.
On Tuesday, the Italian-American automaker announced plans to spend $ 4.5 billion over three years on upgrading several Detroit plants and redeveloping an engine plant for Jeep manufacturing. This effort is expected to create about 6,500 new jobs.
Going from the front, the company has also taken a step back, reducing the operations of an Illinois factory by removing nearly 1,400 jobs.
The other major American manufacturers, General Motors and Ford, have reduced their jobs and production. Mike Manley, managing director of Fiat Chrysler, said he was confident that the US economy would stay on track.
"The economic indicators as we see them are still strong," he said during a conference call with reporters.
He also noted that the refurbished factories would produce three major Jeep models – growing vehicles, as consumers turn to SUVs and abandon more and more sedans. The plan, said Mr. Manley, "is an investment in Jeep as the main brand."
Fiat Chrysler intends to convert its Mack Avenue Engine plant in Detroit to produce a new seven-passenger Jeep model and the new version of its Jeep Grand Cherokee, resulting in the creation of 3,850 jobs. Mr. Manley said construction would begin in the second quarter. Factory conversion plans had surfaced in the news in December.
The company will also upgrade another Detroit plant, known as Jefferson North, to build the next-generation Grand Cherokee and the Dodge Durango, another S.U.V., creating 1,000 additional jobs. A third plant in Warren, Michigan, which is currently producing an older version of the Ram 1500 truck, will be modified to create two more new vehicles: the Jeep Wagoneer and the Grand Wagoneer. This will bring 1,400 jobs to the Warren plant.
Mr Manley said the changes made at the factory would allow Fiat Chrysler to start making electric versions of its Jeep models if customer demand increased.
While the company is expanding in Michigan, it has announced that it would fire 1,371 of the 5,464 workers at its Belvidere plant in Illinois. The factory where Fiat Chrysler manufactures the Jeep Cherokees, employs three people and runs six days a week. The job cuts will come into effect on May 6, after which the factory will operate two shifts of eight hours five days a week.
A spokesman for Fiat Chrysler said the automaker was not planning to move Belvidere workers to Michigan factories where jobs are being created.
Fiat Chrysler was ahead of most of its competitors when it stopped producing sedans in 2016 to focus on pickup trucks, underwater vehicles and other large vehicles, sales of which increased due to lower prices of essence. GM and Ford are struggling to catch up.
G.M. announced last year that it would close two plants in the United States and a third in Canada. Ford announced last year that it would stop making sedans and that it was in the process of restructuring to improve its profitability. Both G.M. and Ford eliminate thousands of salaried jobs as part of their cost-cutting efforts.
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