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MarketScreener Homepage  >  Equities  >  Tokyo  >  Nissan Motor Co Ltd    7201   JP3672400003

NISSAN MOTOR CO LTD (7201)
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Fiat Chrysler to invest $1 billion in Michigan plant, add 2,500 jobs

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01/12/2018 | 02:09am CEST
A Chrysler Warren Truck Assembly sign is seen in front of the Fiat Chrysler Automobiles (FCA) plant in Warren, Michigan

DETROIT (Reuters) - Fiat Chrysler Automobiles (>> Fiat Chrysler Automobiles NV) said on Thursday it will shift production of Ram heavy-duty pickup trucks from Mexico to Michigan in 2020, a move that lowers the risk to the automaker's profit should President Donald Trump pull the United States out of the North American Free Trade Agreement.

DETROIT (Reuters) - Fiat Chrysler Automobiles (>> Fiat Chrysler Automobiles NV) <FCAU.N> said on Thursday it will shift production of Ram heavy-duty pickup trucks from Mexico to Michigan in 2020, a move that lowers the risk to the automaker's profit should President Donald Trump pull the United States out of the North American Free Trade Agreement.

Fiat Chrysler said it would create 2,500 jobs at a factory in Warren, Michigan, near Detroit and invest $1 billion in the facility. The Mexican plant will be "repurposed to produce future commercial vehicles" for sale global markets. Mexico has free trade agreements with numerous countries.

Fiat Chrysler Chief Executive Sergio Marchionne a year ago raised the possibility that the automaker would move production of its heavy-duty pickups to the United States, saying U.S. tax and trade policy would influence the decision.

If the United States exits NAFTA, it could mean that automakers would pay a 25 percent duty on pickup trucks assembled in Mexico and shipped to the United States. About 90 percent of the Ram heavy-duty pickups made at Fiat Chrysler's Saltillo plant in Mexico are sold in the United States or Canada, company officials said.

Negotiators for the United States, Mexico and Canada are scheduled to meet later this month for another round of talks on revising NAFTA. Canadian government officials earlier this week said they are convinced that Trump intends to announce his intention to quit the agreement.

Trump has threatened to force the rollback of NAFTA, which enables the free flow of goods made in the United States, Canada and Mexico across the borders of those countries. He also has criticized automakers for moving jobs and investment in new manufacturing facilities to Mexico and prodded them to add more auto production in the United States.

On Wednesday, Toyota Motor Corp and Mazda Motor Corp announced they would build a new $1.6 billion joint venture auto assembly plant in Alabama, drawing praise from Trump.

Vice President Mike Pence praised Fiat Chrysler's announcement. "Manufacturing is back. Great announcement. Proof that this admin’s AMERICA FIRST policies are WORKING!” Pence said in a Twitter posting.

Chrysler raised its output in Mexico by 39 percent in 2017 to 639,000 vehicles, according to Mexican government data. That made Fiat Chrysler the third-largest producer of vehicles in Mexico in 2017, after Nissan Motor Co (>> Nissan Motor Co Ltd) and General Motors Co (>> General Motors Corporation).

The United States and Canada are the principal markets for full-size heavy-duty pickup trucks, most of which are produced in the United States by FCA, GM, Ford Motor Co (>> Ford Motor Company), Toyota Motor Corp (>> Toyota Motor Corp) and Nissan Motor Co (>> Nissan Motor Co Ltd).

Miguel Ceballos, FCA spokesman for Mexico, said the company in 2018 and 2019 expects more growth in Mexico, and the moment it stops producing the Ram Heavy Duty pickups it will start to produce the new commercial vehicle, "which still does not have a name," Ceballos said.

"It is going to be for global distribution, at the moment the Ram is only distributed at the level of NAFTA," he said.

Ceballos said there was no current plan to either reduce or grow the workforce in Mexico.

GM has been readying a plant in Silao, Mexico, to build a new generation of large pickup trucks.

FCA on Thursday said it also would make a special bonus payment of $2,000 to about 60,000 FCA hourly and salaried employees in the United States totaling about $120 million. Typically, U.S. automakers only pay bonuses to hourly workers as part of collective bargaining agreements.

(Reporting by Uday Sampath in Bengaluru and Paul Lienert in Detroit Additional reporting by David Shepardson in Washington and Ana Isabel Martinez in Mexico City; Editing by Maju Samuel and Matthew Lewis)

By Paul Lienert and Joseph White

Stocks mentioned in the article
ChangeLast1st jan.
FIAT CHRYSLER AUTOMOBILES 2.98% 13.842 End-of-day quote.-6.06%
FORD MOTOR COMPANY 0.72% 8.41 Delayed Quote.-30.82%
GENERAL MOTORS CORPORATION 0.45% 31.34 Delayed Quote.-21.64%
NISSAN MOTOR CO LTD 0.20% 1003.5 End-of-day quote.-11.19%
TOYOTA MOTOR CORP -0.43% 6549 End-of-day quote.-10.29%
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Financials (JPY)
Sales 2019 11 855 B
EBIT 2019 -
Net income 2019 537 B
Debt 2019 6 801 B
Yield 2019 5,66%
P/E ratio 2019 7,31
P/E ratio 2020 6,67
EV / Sales 2019 0,93x
EV / Sales 2020 0,93x
Capitalization 4 227 B
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Mean consensus HOLD
Number of Analysts 20
Average target price 1 168  JPY
Spread / Average Target 17%
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Managers
NameTitle
Hiroto Saikawa Vice Chairman, President & Chief Executive Officer
Carlos Ghosn Bichara Chairman
Hiroshi Karube Chief Financial Officer
Takao Asami Senior Managing Executive Officer & Head-Research
Anthony Thomas Chief Information Officer & Corporate VP
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