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Time For A New Product At FCA Assembly Plant Windsor

2019 Chrysler Pacifica. Time For A New Product At FCA Assembly Plant Windsor

Photo: Fears that Windsor’s 6,000 job automotive assembly plant could be closed have been debunked, but slumping sales of superstar car Chrysler Pacifica could threaten the plant’s third shift, which employs some 1,000 workers.

Time For A New Product At FCA Assembly Plant Windsor

(Editorial viewpoint)

Ever since General Motors announced last November it was closing its Oshawa Assembly Plant — at the cost upwards of 2,500 jobs — there has been paranoia afoot at the Fiat Chrysler Automobiles (FCA) Assembly Plant in Windsor.

Could Windsor be Oshawa-ed? Windsor Mayor Drew Dilkens has raised that possibility, claiming the city needs to triple efforts to diversify its economy to lessen its reliance on automotive jobs.

So I asked Tony Faria, retired University of Windsor professor and auto industry guru, if there was any danger of our FCA plant closing down?

It’s always good to prepare, but I don’t see any problem in the near to mid-term,” says Faria. “But who can predict 20 years down the road?”

Windsor’s minivan plant, which manufactures the much decorated Chrysler Pacifica, and the Dodge Grand Caravan, employs 5,859 hourly and 245 salaried workers. A limited number of Pacifica Hybrids are also built here.

Windsor’s security blanket is the $2 billion plus plant that was completely retooled four years ago to build the new Pacifica on a global platform.

It’s still leading all plants in world class manufacturing,” boasts Windsorite Ken Lewenza Sr., former National President of the Canadian Auto Workers union.

It’s a great plant with a great workforce and I don’t see Fiat abandoning it,” Faria remarks.

But, here’s the rub. The minivan market is shrinking as consumers opt for bigger models such as Jeep SUVs, and RAM pick-up trucks, built in the U.S.

If the trend continues Faria says the 35 year old third shift at the Windsor Assembly Plant could be in jeopardy. If it is eliminated that would mean the loss of over 1,000 jobs.

I know a retailer who speaks candidly to FCA insiders. Every extended layoff sets off alarm bells inside the plant, he reveals.

The latest signal came when FCA shut down the plant for two weeks in January and another week in February for “inventory adjustments.”

FCA, short on delivery orders for new cars, has reacted by slowing down the line by 10%, which means two workers are needed instead of three, with the third one being laid off. Hundreds of workers could be let go this way, some permanently.

These are called line re-assessments and are much preferable to the public relations black eye of shutting down the third shift. This is how Faria believes the company will handle things.

Pacifica sales are slumping badly in Canada. As a snapshot, sales tumbled 47%, from 522 vehicles sold in January of 2018 compared to 277 this January.

Faria attributes it to price.

Young families can’t afford it,” he says. “When I heard what the Pacifica price would be I thought it was really high, I really wondered.”

When the all new Pacifica was launched, replacing the Town and Country, prices were set in the $60,000 range for fully loaded 2017 models. Today, with dealer discounts up to $7,000, a 2019 Pacifica with all the bells and whistles can be fetched for $57,465.

An indicator of the current climate is the fact that Dodge Grand Caravans, assembled by the same workforce along the same Windsor line, are outselling their brethren by wide margins in North America.

With prices as low as $27,485 with a dealer discount, 32,253 Caravans were sold in Canada in 2018, compared to 5,999 Pacificas.

The Pacifica has done better in the huge American market, selling 118,322 vehicles in 2018, and setting a record for monthly sales of its product in the U.S. last October, increasing 22% to 9,277.

In the months since then, Chrysler sales, including the Caravan, have declined.

Ironically, the slump comes despite the Pacifica being showered with dozens of awards. Cars.com magazine recently named it Family Car of the Year for the second straight year.

When the first minivans rolled off the Windsor assembly line 35 years ago, Chrysler minivans were the only game in town. This is no longer the case although the Pacifica and Caravan still dominate the segment, having expanded their share from 51% to 57% over the Asian competition — Toyota Sienna and Honda Odyssey.

But, the competition within the segment is compounded by consumers rushing to buy from other segments, like light trucks and Jeeps.

The Pacificas have superior fuel efficiency, but in an era of cheap gas, polluting the air is a distant concern to people who love bombing around in a pick-up truck or Jeep Cherokee, without spending $100 to fill their tanks, like when gas prices a decade ago were five or six dollars a gallon.

The price of gas today is not scaring anybody off from buying a big engine vehicle,” says my retailer friend.

At its peak, 430,000 Chrysler minivans were built annually. In 2018, that number has fallen to 299,997, according to the Canadian Vehicle Manufacturing Association. Of those, 171,066 were Caravans and 128,931 Pacificas.

The Caravan is what’s keeping the plant in business,” says Lewenza.

Faria doesn’t disagree, but reminds us that “2016 was supposed to be the last year of the Caravans and they’re still building them in 2019.”

The two men agree that FCA is overdue for a third product to sustain a full throttle third shift.

Faria states, “Somebody really needs to do something about it. The Caravan is long in the tooth.”

We have to work really hard to reinvest back into the plant and put a supplementary product in there,” concurs Lewenza, noting the Volkswagen Routan was manufactured alongside the Chrysler products for six years ending in 2013.

At about 300,000 units a year, the plant could stay on three shifts, but it will have more ‘inventory adjustments’ as it has been having over the last couple of months,” Faria comments.

Chrysler officials are mostly tight-lipped, although Steve Beahm, Head of FCA’s Passenger Car Brands, said recently the company is considering an all-wheel drive Pacifica that has the potential to put other products in the Windsor plant.

Don’t expect that news to appease the nervous nellies.

In a plant like ours there’s a rumour every hour,” quips Lewenza.

If you have a comments or questions on this topic, please post it below and I will do my best to respond.

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