FCA-Unifor deal includes $1.3B for EV production in Ontario, union says

Fiat Chrysler will invest between $1.35 billion and $1.5 billion to begin building electrified vehicles at its Windsor, Ont., assembly plant in 2024, according to Unifor President Jerry Dias.

Dias, speaking Thursday morning at a news conference outlining the details of a tentative three-year contract reached late Wednesday night with FCA, said the automaker plans to launch a new platform at Windsor Assembly that will allow for the production of battery-electric vehicles “and/or” plug-in hybrids at the plant. 

The investment is expected to result in the return of the plant’s third shift in 2024, and about 2,000 workers being hired, according to Unifor. That includes about 425 workers currently on layoff following the end of the third shift earlier this year. About 1,500 workers were laid off as a result of the cut, though many of them took retirement packages, according to Dias.

The investment appears to meet a top priority for the union, which was seeking a new product for the Windsor plant following the elimination amid slumping minivan segment sales. 

The Windsor plant currently builds the Chrysler Pacifica and Voyager minivans, as well as the Grand Caravan for the Canadian market. The minivans will continue to be built alongside the vehicles on the new platform, according to the union.

"This is a huge commitment to our plant," Dias said. "It’s a huge commitment to our members. And this is, I would argue, a home run for the community of Windsor."

The automaker would only say it has reached a tentative agreement with Unifor and that further details will be provided at a later date.

The contract must be ratified by workers to take effect. A ratification vote was expected to begin Sunday morning, with results known by Monday. The agreement also covers fire and security workers at the Windsor plant and about 60 office and clerical workers, according to the union. Unifor represents about 8,400 FCA hourly in workers in Canada, according to the automaker.

In an interview with Automotive News Canada, Dias said he expected there to be further layoffs at Windsor Assembly between now and 2023, given the shrinking minivan segment. He said there has been no word from FCA about when those layoffs might come, but he said there was “no question” they were coming.

“That’s why winning the investment was so important,” he said.

Work at the plant would begin in 2023 with a 38-week ramp-up, according to Dias, with the first production vehicles rolling off the line in 2024. He said it was “too soon” to know what vehicles FCA will assemble on the new platform, though he said it will be able to build “multiple vehicles” including cars, crossovers and pickups, depending on consumer demand.

“The decision that will be made as to what will be manufactured will be done early in the game, but it will be based on the conventional knowledge as to where consumers and consumer demand is heading,” he said.

PLAN CALLED ’QUITE OPTIMISTIC’

Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions LLC, said low EV sales volumes and increasing competition could make meeting employment targets of 2,000 people being added to the workforce at Windsor “quite optimistic.” He said a hybrid crossover, perhaps one based off the Pacifica platform, as opposed to a pure battery-electric vehicle could go further toward meeting those goals.

Dias said FCA’s pending merger with French automaker PSA Group had no impact on the discussions. Fiorani, however, said he was “curious” if the new platform for Windsor might be shared with PSA.

“FCA doesn’t have an electric platform. PSA does,” he said. “I got to think that the future of PSA and FCA have to have influenced this somewhat. FCA has been not shy about not wanting to design their own EVs, and PSA is not shy about having a whole line of them.”

Dias said FCA would put up the “lion’s share” of the funding for Windsor, but said the company was actively engaged with the federal and Ontario governments for support. It was not clear how much funding was being discussed.

"We are at the table and prepared to support the future of our auto sector, particularly with regards to the development of electric vehicle and battery production here in Canada," a spokesman for Industry Minister Navdeep Bains said in an email.

While acknowledging that the planned investment is contingent upon government support and market conditions, Dias said he was not concerned about FCA and the governments failing to reach an agreement and the automaker walking away as a result. Dias said he has been actively involved with those talks.

“I don’t see that happening. The reality is everyone understands the importance of this industry,” he said.

A request for comment from the provincial government was not immediately returned.

PATTERN FOLLOWED

FCA’s investment plans follow those by Ford Motor Co. for its Oakville, Ont., assembly plant. The automaker plans to invest $1.8 billion, including $590 million in government support, in the Oakville factory to begin building electric vehicles by 2026. 

FCA also plans to begin building three derivatives of the Dodge Charger and Dodge Challenger muscle cars it assembles at the Brampton, Ont., assembly plant, over the course of the contract. Dias called the trio of derivatives “top hats” for the nameplates. 

The factory also builds the Chrysler 300 and will continue to do so over the life of the agreement after FCA committed to extend the life of the sedan, according to Unifor. Brampton will receive about $50 million in investments, the union said.

The future of the Brampton plant has long been the subject of speculation. The Charger and Challenger are believed to be highly profitable for FCA, but they are built on aging platforms, raising questions about the long-term prospects of the plant. Dias said he’s confident the jobs are safe for the duration of the three-year deal.

“The company, frankly, does not see one iota of anything changing” at the Brampton plant, he said.

Fiorani said the plans for Brampton appeared “a little light” and that the future of the products built there beyond 2023 is uncertain. He said the extension of the 300 production was something that his firm has anticipated for a while. Meanwhile, there is no indication about when a next-generation Charger or Challenger might be on the horizon, he said.

“We were anticipating a next-generation Charger and Challenger, but the plans of those have been sliding back every time we get an update on information,” he said. “It’s always tomorrow. It’s always being pushed out one more day, and nobody wants to commit and say, this is the next-generation Charger and Challenger. And they definitely aren’t saying there’s a next-generation 300.”

MORE PRODUCT AND JOBS

The FCA contract also includes three new products for the automaker’s casting plant in Toronto, resulting in about 100 additional jobs, according to Dias. About 80 of those jobs will be filled by workers who recently transferred from Etobicoke Casting to Brampton Assembly.

The casting plant “will see more work in-sourced” for the Jeep Wrangler, nine-speed transmissions and “potentially other products,” according to a news release. About 300 workers are expected to be on the job in Etobicoke by the end of the agreement, up from about 200 today but down from around 500 in 2016.

He said the FCA contract follows the pattern set by the Ford contract, with a “significant” signing bonus for workers and a reduction in the wage grow-in period for new hires from 10 to eight years. He did not offer further details, which are expected to be unveiled to Unifor members at a Sunday ratification meeting.

As late as Wednesday, Unifor was signaling that it and FCA were far apart in negotiations, in large part due to pattern bargaining. Dias told Automotive News Canada on Wednesday morning that the union had “major issues” with FCA not committing to the pattern set by the Ford contract.

Should workers ratify the tentative contract with FCA, Unifor would begin negotiations with General Motors. The GM contract covers workers at an engine and transmission plant in St. Catharines, Ont., as well as the company’s new aftermarket parts operation at its former assembly plant in Oshawa, Ont. GM’s CAMI Assembly plant in Ingersoll, Ont., is on a separate contract that expires in 2021.

“We have a very aggressive agenda in front of us,” Dias said.