Fear of NAFTA collapse seen as factor in move of Ram production from Mexico

Fiat Chrysler hailed the corporate tax cut as a big reason for investing $1 billion in its Warren Truck plant to build heavy duty Ram pickups now assembled in Mexico.

But the Trump administration's threat to walk away from the North American Free Trade Agreement was at least as big a factor, an industry scholar told the Free Press.

About 80% of the Rams now built in Mexico are shipped to the U.S., said Kristin Dziczek, director of the industry, labor and economics group at Ann Arbor's Center for Automotive Research.

If NAFTA ends, the U.S. almost certainly would slap a 25% tariff on every truck shipped across the border. While automakers are paid more in the U.S., the added labor cost pales in comparison to the threat of a tariff, Dziczek said.

Talks between the U.S. and Mexico bogged down in late November after Mexico proposed to limit U.S. companies' ability to bid on government contracts. The move was seen as retaliation for demands from the Trump administration.

Those include a proposed requirement that 50% of all auto parts or vehicles assembled in Mexico start in the U.S.

"With all the uncertainty surrounding NAFTA, it just makes sense to do this and eliminate the potential negative impact," she said.

Read more:

History of Fiat Chrysler's Warren Truck Assembly Plant

Fiat Chrysler will invest $1B in Warren Truck plant; bring Ram work back from Mexico

Trump tweets praise Fiat Chrysler's 'wise decision' to shift from Mexico to Detroit area

But will FCA be able to find enough workers in southeast Michigan with a relatively low unemployment rate of 4.6% as of November 2017? FCA has recently been advertising for autoworkers, including on billboards in metro Detroit.

Dziczek said hiring isn't as hard as it may seem.

"Keep in mind, both the Jeep Wagoneer, Grand Wagoneer and now the large Ram's production won't begin until 2020," she said. "They haven't said what happens with the Toledo Supplier Park."

The Auburn Hills automaker also has pockets of workers who may be on layoff status at engine plants in Trenton and Dundee, as well as at an axle plant in Marysville, Mich.

FCA's agreement with the UAW allows workers to move from one plant to another within a radius that would cover all those locations.

Contact Greg Gardner: 313-222-8848 or ggardner99@freepress.com. Follow him on Twitter @GregGardner12