Dilemma

Fiatsler’s Dilemma: Build Engines In Michigan Or Mexico?
By Edward Niedermeyer on November 18, 2009

The engine in question is Fiat’s 1.4 liter “Fire,” planned for use in the Fiat 500 as well as planned Dodge and Chrysler B-segment hatchbacks. Automotive News [sub] reports that the Michigan Economic Growth Authority has authorized ten years worth of employment tax credits if Chrysler builds the engines at an unused plant in Dundee, MI. But the credits are only worth an estimated $4.6m, and MEGA admits that that building the engines in Mexico would be cheaper for Chrysler. The most important factor: the engine will primarily power the Fiat 500, which will be built in Toluca, Mexico. Since most of the 500s built in Toluca will be headed to the Brazilian market, Michigan engine production makes even less sense. And since there won’t be any other North American products using the 100 hp, 92 lb-ft engine until 2013 (if the Fiatsler experiment even makes it that far), there’s almost no reason for Michigan to build these engines. Still, with 250k units planned annually, it’s no wonder MEGA dangled tax credits anyway. Besides, there’s one more wrinkle: one of the ways Fiat can gain another five percent of Chrysler’s imaginary equity is to “manufacture state-of-the-art, next-generation engines at a U.S. Chrysler facility.” Fiatsler is bringing Fiat back to the US as a one-model-brand (500) with a dedicated sales and support staff just to meet one of these government benchmarks… will they be crazy enough to build an engine in Michigan and ship them to Mexico to meet another?