5 key questions as FCA's Pacifica launches in Windsor

Friday, May 6, 2016

Brent Snavely, Detroit Free Press

FCA CEO Sergio Marchionne will commemorate the launch of the Chrysler Pacifica in Windsor just as the company and Unifor are starting to gear up for contract talks later this year.

As thousands of workers at Fiat Chrysler's Windsor Assembly plant gather to celebrate the official launch of the 2017 Chrysler Pacifica today,  they likely will have several burning  questions on their minds about FCA's future commitment to Canada and  contract negotiations later this year.

CEO Sergio Marchionne will likely tout the 1,200 additional workers hired to launch the Pacifica, and the $2.6-billion investment to develop the vehicle  and retool the plant.

That investment likely ensures a bright future for Windsor Assembly Plant for years to come, considering initial reviews of the vehicle have been mostly positive and FCA has made it clear it wants to make the 2017 Pacifica a winner. The vehicle has an alluring design, drives well and is loaded with new technology.

But other insecurities about FCA's future in Canada remain. FCA plans to eventually eliminate the Dodge Grand Caravan — Canada's top-selling minivan — which is also made at the plant in Windsor. And Unifor, the Canadian version of the UAW, is scheduled to renegotiate its four-year contract with FCA later this year, and Canadian autoworkers haven't a raise in years.

So here are five questions that will likely be on the minds of employees as Marchionne prepares to step up to the podium later today:

What is the future of Dodge Grand Caravan? FCA is in the process of transitioning to a single nameplate for its minivans — Chrysler Pacifica — and has said it eventually plans to phase out the lower-priced Dodge Grand Caravan. But the Grand Caravan outsold the Chrysler Town & Country in the U.S. last year and is the top-selling minivan in Canada. That makes it likely that FCA will continue to produce the Caravan in Windsor for at least another year, but it has not revealed specific plans.

"The Pacifica is certainly a better-looking, better-equipped vehicle in every way, but there is going to be a sizable market that can’t afford the Pacifica," said Tony Faria, professor emeritus of business at the University of Windsor.

Will a new Dodge crossover replace the Caravan? Back in 2014, when FCA revealed its five-year strategic plan, the automaker said it planned to launch an  all-new Dodge crossover in 2017. It was understood at the time that the crossover would be built on the same platform as the Chrysler Pacifica and would be built in Windsor. But little has been said recently about these plans, which seem to have been delayed as plans to extend production of the Grand Caravan have emerged.

The Pacifica looks good, but how well will it sell? FCA hired 1,200 additional workers to launch the Pacifica and employs about 6,000 workers at its Windsor Plant who work three shifts. And that's great employment news for Windsor, Detroit's sister city across the river.

But the Pacifica will need to be a huge hit to continue to support all three shifts of workers. Last year, the automaker sold more than 97,141 Dodge Grand Caravans in the U.S. and 93,848 Chrysler Town & Country minivans. Can the Pacifica eventually outsell both outgoing minivans?

Will Unifor President Jerry Dias say anything about contract talks? Dias, who is also scheduled to speak today, will lead the Canadian union that represents 25,000 autoworkers in contract negotiations with the Detroit Three later this year.

Dias, a firebrand when speaking to workers, might touch on some hot topics that the union plans to target during negotiations with FCA. This year, Unifor wants to shorten the 10-year period it takes for a newly hired worker to reach the top end of the pay scale and is likely to push for wage increases, Faria said. In Canada, new workers start at 60% of the regular hourly rate of about $34 (CAN) and reach the top of the pay scale after 10 years.

"Clearly, the Unifor workers who have not had a pay increase for a lot of years are looking for a pay increase," Faria said.

The Windsor plant is secure, but what about Brampton? FCA builds the Chrysler 300, Dodge Charger and Dodge Challenger at its plant in Brampton, Ontario, and the platform for those cars has not been updated in years.

Meanwhile, in the U.S., FCA is in the process of discontinuing the Dodge Dart and the Chrysler 200 as part of a massive plan to shift the production location of its cars and trucks. That plan opens up excess capacity for FCA at several U.S. plants, raising questions about the need for the Brampton plant.

"Marchionne has been rather clear in comments over the last year that nothing is going to be announced with regard to Chrysler’s Bramption plant...until after the next (Unifor) contract is negotiated," Faria said.