FCA will invest more than $1 billion into plants in Michigan and Ohio in order to boost manufacturing of trucks and SUVs, the company said Sunday, including the Ram heavy duty truck, which is currently made entirely in Mexico. Some of the output from these plants will also be sold overseas, Fiat said.
"These moves, which have been under discussion with Dennis Williams and the rest of the UAW leadership for some time, expand our capacity in these key segments, enabling us to meet growing demand here in the U.S.," said CEO Sergio Marchionne.
The next stage of its 'industrialization' strategy, FCA's plan is expected to create as many as 2,000 new jobs, bringing the total number of jobs created since the 2009 rescue of Chrysler to 25,000, and the value of cash-investment to $9.6 billion.
The announcement was emblematic of the tall shadow that now stands over auto manufacturers who sell into the United States, in the form of president-elect Donald Trump. It's a shadow that has already caused (FORD - Get Report) (F - Get Report) to reverse course.
The U.S. automaker recently canceled a new $1.6 billion assembly plant in Mexico, instead opting to build small cars in an existing Mexican factory. Further, it will invest $700 million in a Michigan facility that will build electric vehicles.
Meanwhile, last week Japanese firm Toyota (TM - Get Report) was the latest firm to come under fire in the soon-to-be commander in chief's twitter feed, for its plans to locate production of a new model of truck for the U.S. market in Mexico.
Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.— Donald J. Trump (@realDonaldTrump) January 5, 2017
Firms may now face having to rethink new investment plans and, potentially, to make costly changes to their existing manufacturing footprints.
The majority of European firms that sell into the U.S have manufacturing operations in Mexico, with both BMW (BMWYY) and Volkswagen (VLKAY) having announced $1 billion investments in production facilities across the southern border in 2016 alone.
As of yet, details of Donald Trump's proposed border tax are unknown - but the prospect of the increased costs and complexity that it could bring will be unwelcome among European car firms, many of whom are locked in an R&D driven race to be the first mass-market leader in electric and autonomous engine technology.