Toledo, Ohio, is scrambling to come up with an incentive package that would allow it to remain the production home of the Jeep Wrangler, a vehicle with deep economic and emotional ties to the area.
For decades, the rugged sport-utility vehicle has been built in Northern Ohio and local politicians want to ensure the next model is, too. Jeep’s owner, Fiat Chrysler Automobiles NV, hasn’t asked for a penny but has hinted it may consider other production locales.
A redesign of the Wrangler, which still resembles the military vehicle it is based on, is due in 2017. The new model’s body likely will be made largely of lightweight aluminum instead of steel. Chief Executive Sergio Marchionne said in October that change may prompt a shift of Wrangler production to another factory. City and state officials are taking his remarks to heart.
“It’s very troubling,” said Matt Sapara, Toledo’s economic development chief. Jeeps have been built in Toledo since World War II, and their rough-and-tumble image is part of the city’s identity. “We’re doing everything we can to keep the Wrangler,” said Mr. Sapara.
Toledo now employs 5,000 Fiat Chrysler workers, many building Wranglers. Mr. Marchionne has said Toledo wouldn’t lose jobs and would get another vehicle to build if the Wrangler is moved elsewhere.
But locals say the Wrangler has been a constant in a boom and bust business. A campaign to keep the Wrangler in Toledo has come with rallies, banners expressing Jeep fealty, and an offer of 70 acres for expansion. Around town, signs on buildings and fences proclaim “This is Home” printed under a picture of a red Jeep Wrangler with an outline of the state of Ohio around it.
City officials approved spending more than $700,000 for land to offer Fiat Chrysler for a factory expansion.
This comes on the eve of Fiat Chrysler’s 2015 labor negotiations with the United Auto Workers union. Pledges of new investments in factories typically play a role in such in a car company’s ability to hammer out favorable terms.
‘ We’ve had employment spikes and declines. The Wrangler has been stable.’
—Bruce Baumhower, UAW Local 12 president
“We’ve been building that vehicle for years,” said Bruce Baumhower, president of UAW Local 12, which represents workers at the Toledo plant. “In that time, we’ve seen cars come and go. We’ve had employment spikes and declines. The Wrangler has been stable.”
But Mr. Baumhower said Fiat Chrysler also faces the challenges of having to take one of its busiest plants off line for the changeover to aluminum—a process that could take several months. “It’d be like shutting down the cash register,” he said.
Chrysler is no stranger to government support. Twice bailed out by U.S. taxpayers and acquired by Italy’s Fiat after it filed for bankruptcy protection in 2009, the auto maker has received $2 billion in taxpayer moneys since 2003 to encourage future production, according to the Ann Arbor-based Center for Automotive Research.
But state and local incentives, including tax breaks, have been a staple of the auto industry. Since 2003, car and car-parts suppliers have collected $16.5 billion in such incentives, according to CAR. The research group estimates those incentives have corresponded 180,000 jobs created or preserved and auto makers have spent $3.50 for every public dollar received.
Helping auto makers in their quest for taxpayer handouts is more flexible manufacturing processes. The changes makes it easier for car makers to move production if it receives a better offer elsewhere.
The Toledo mayor’s office expects to meet again with Chrysler officials to sharpen its pitch for the new Wrangler. Details of what it plans to offer apart from land haven’t been made public.
“It’s like a poker game,” said Kim Hill, director of the economic development strategies group at CAR. “You have to ante up or you’re not in the [siting] conversations.”
Auto makers in recent negotiations have asked governments for between 15% and 20% of the investment required to build cars, Mr. Hill said. In the case of a new car-assembly plant, the returns can be big, creating about 10 new jobs locally for every one auto worker hired. They are less so when keeping an existing factory, he said.
At the moment, car production is a sweet spot for Toledo. The Wrangler is one of Chrysler’s top sellers. Plant employees have worked weekends and through Christmas and routine summer shutdowns. Mr. Marchionne has stressed the need to expand but says the site is mostly hemmed in by other structures.
Sales of the Wrangler are up 12.4% through November and, when combined with the Cherokee SUV built next door, Toledo workers will turn out a record of more than 500,000 Jeeps in 2014, making it the second largest U.S. light-vehicle factory by production.
“The city is prepared to do everything we can to put us on a level playing field with other plants,” Toledo’s Mr. Sapara said. “The public support is important…but at the end of the day, it is going to come down to the bottom line.”
Write to Christina Rogers at christina.rogers@wsj.com
Toledo Rallies to Remain Jeep Home - Wall Street Journal
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