By the BF Editorial Staff
From the January/February 2020 Issue
What do the award winners for the top three prizes in BF’s 2019 Deal of the Year competition have in common? Here’s a hint: the projects (and the organizations behind them) that snared our Gold, Silver and Bronze trophies each revolve around automobiles.
The Gold Award (see below) in our hotly contested 2019 DOTY contest went to Michigan Economic Development Corp. for Fiat Chrysler Automobiles’ (FCA) $4.5-billion expansion in Michigan, which includes a new Jeep assembly plant in Detroit—the first new OEM assembly plant to rise in Motown in nearly three decades. [The revival in Motown accelerated with GM’s announcement at press time that it will invest $2.2-billion to convert its aging Detroit-Hamtramck plant into an assembly line for a new electric Hummer pickup truck].
Our Silver Award was captured by Jackson County (GA) Area Chamber of Commerce for a critical component that no doubt will power most of the vehicles built in the remainder of the 21st century: lithium-ion batteries. South Korea-based SK Group is aiming to be the major battery supplier to automotive OEMs in the Southeast, including nearby KIA, with its $1.67-billion plant in Commerce, GA.
The project that earned the City of Dallas, TX our Bronze Award doesn’t involve an automaker (or an automotive parts supplier), but Uber’s new administrative hub will touch millions of people who ride in motor vehicles driven by its drivers. The ride-sharing giant was looking for an ultra-cool, 24/7 neighborhood in a U.S. city and Big D’s historic Deep Ellum district fit the bill to a T. Howdy, hipsters.
(We also have nine Honorable Mention winners, don’t forget to check them out!)
Fiat Chrysler enlarges its Michigan footprint with a $4.5-billion project that includes a new Jeep assembly plant in Detroit and production expansions at four other MI plants.
Project Title: Fiat Chrysler Expansion
Entered By: Michigan Economic Development Corp.
A mega-deal that landed in the center of the automotive universe has captured Business Facilities’ Gold Award for the 2019 Deal of the Year.
Michigan Economic Development Corp. took the top prize in BF’s annual deal-making competition for Fiat Chrysler Automobiles’ (FCA) expansion, a $4.5-billion project that includes a new Jeep assembly plant in Detroit and production expansions at four other Michigan plants which will bring more than 15,000 direct and indirect new jobs to the region over the next three decades.
”The Fiat Chrysler expansion should erase any doubt that Michigan remains the undisputed automotive champ of North America,” said BF Editor in Chief Jack Rogers. “Motown is putting the pedal to the metal on its impressive economic resurgence.”
The new FCA plant in Detroit will house the assembly lines for the next generation Jeep Grand Cherokee and the all-new full-size (with three seating rows) Jeep SUV, along with plug-in hybrid (PHEV) models.
“As demand for SUVs and electric vehicles increase, this investment is securing Michigan’s leadership in automotive technology for years to come and will help [to usher in] the next generation of transportation,” MEDC’s Deal of the Year submission declared.
LARGEST AUTO DEAL OF THE DECADE
In May of 2019, FCA announced plans to build a new assembly plant in Detroit and expand production at four other existing Michigan facilities. With the support of Michigan Economic Development Corporation (MEDC) and several other organizations, including DTE Energy, the Detroit Economic Growth Corporation (DEGC) and the City of Detroit, the finished project will become the first new auto assembly plant Detroit has seen in nearly three decades.
Construction for the various plants began in the fourth quarter of 2019. In December, DTE Energy demolished the old Conners Creek Power Plant in Detroit, which sat on part of the land exchange made with the city to make room for the new Fiat Chrysler plant.
The power plant had sat idle since it was retired in 2008. The demolition was accomplished using the explosive felling process, which uses strategic explosives to bring down a structure in a controlled manner. In its heyday, from 1915 to 1957, the Connors Creek plant employed more than 350 people and produced enough energy to power nearly 400,000 homes. When Michigan’s automakers transitioned their plants to produce military vehicles and planes for World War II, the Conners Creek Power Plant was critical to the success of that effort.
“Conners Creek Power Plant played an important role in the growth of Detroit and is an integral part of DTE’s history,” said Trevor Lauer, president and COO, DTE Electric. “While its time as a power plant has passed, the employees who ran it for nearly a century will be remembered and honored by all of us at DTE. We are very pleased that it continues to play a role in Detroit’s growth.”
MEDC expects the FCA expansion project to be completed in 2021. The project will bring approximately 6,433 direct permanent jobs to the area by 2022.
“FCA’s investment in five existing plants, as well as plans to build an all-new assembly plant here in Michigan, sends an irrefutable signal that Michigan remains the automotive capital of the world,” Gov. Gretchen Whitmer said at the project announcement.
Described as the largest automotive assembly plant deal in the U.S. in the last decade, MEDC’s analysts predicted that the total economic impact of the project over the next 33 years will be more than $500 billion.
According to The Center for Automotive Research, automotive assembly plant jobs have a multiplier effect of eight, meaning that for every direct job created at an automotive assembly plant, an additional seven jobs are supported throughout the supply chain.
Given the large investment made by FCA and the predicted economic output, the project was awarded numerous performance-based incentives through MEDC and the Michigan Strategic Fund (MSF). To support the projects in Detroit, the MSF approved a $10-million Michigan Business Development Program performance-based grant; a 100-percent Good Jobs for Michigan withholding tax capture for up to 10 years valued at up to $99 million; and two 100-percent State Essential Services Assessment (SESA) exemptions for up to 15 years valued at up to $31.5 million.
Along with the Detroit partnerships, MEDC also collaborated with the City of Sterling Heights and City of Warren for the expansions of the Sterling Stamping, Warren Truck and Warren Stamping plants. In total, these projects represent the creation of 1,483 new jobs and $1.9 billion in capital investment.
The expansions at the other three plants make this project the largest private investment deal in MEDC history, thus allowing for additional performance-based incentives to be awarded based on the total investment and number of jobs expected to be created. As per a REMI analysis, for every dollar spent on incentives provided for the project, Michigan will receive $18.20 back in economic benefit.
In addition to the redevelopment and expansions of its existing plants, FCA, in coordination with the City of Detroit and the Detroit Brownfield Redevelopment Authority (DBRA), had to purchase additional parcels of property to complete its plan to create the new assembly plant. The City of Detroit and DBRA collaborated to find the approximately 215 acres of land needed within 65 days in order to allow the company to construct the new facility. The various parcels were owned by several different individuals, all with varying degrees of clean-up and other site-preparation necessary to begin the project.
Gathering the land for the new automotive assembly plant was crucial to FCA’s investment and was only possible through the strong partnership in place between all parties involved. By working together this project not only expands the company’s operations but allows FCA to continue to contribute to Detroit’s economic comeback while also boosting local economies in all corners of the state.
“At FCA, we are continuing to build a secure future, not only for our company but also for the communities in which we operate. This investment enables us to deliver on this promise in the state and city we call home,” said Mark Stewart, FCA’s chief operation officer for North America.
Along with MEDC, DEGC and DBRA, the project also includes a partnership with Detroit Employment Solutions Corporation (DESC) and the local Neighborhood Advisory Council. All parties involved worked close together to create an exceptionally large community development aspect to this project.
With the help of the Neighborhood Advisory Council, FCA was able to engage with the public throughout the process to solicit community feedback. Based on the feedback already received, FCA has committed $800,000 for recommended projects that result from neighborhood planning in the impact area. FCA also committed to direct $5.8 million in state funding towards programs to maximize employment to Detroit residents, collaborating with DESC to create support for small businesses through matchmaking events in the impact area.
SPREADING THE WEALTH ACROSS MI
In addition to the new $1.6-billion Jeep plant in Detroit, FCA’s expansion project includes more than $1.5 billion in investment in two Macomb County auto plants; the auto giant also is investing $900 million to retool and modernize its Jefferson North Assembly Plant. FCA is expanding its Warren Truck Assembly Plant for production of the all-new Jeep Wagoneer and Grand Wagoneer, creating 1,400 new jobs.
FCA also is spending $236 million at the Warren Stamping Plant to add new technology and machinery, and $169 million at the Sterling Stamping Plant.
PROJECT IMPACT ESTIMATES
- More than 23,000 direct, indirect and induced jobs over 33 years.
- Estimated new wages over the next three decades totaling $32 billion.
- Direct/indirect/induced economic impact of $583 billion over 33 years
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