Report: Third Ram Truck Plant Being Considered
Marchionne Reportedly Favors Increased Output from Existing Plants
Chrysler as a whole has had a healthy 2013, and a large part of the company's success can be directly attributed to its Ram truck brand. Sales of the Ram pickups have shown a double-digit year over year increase almost every month of the year in 2013, and demand is so strong for the trucks, that the prospect of a third truck plant is reportedly being considered, according to Automotive News.
Ram pickups are currently produced at two plants, one in Warren, Michigan, which makes the 1500-series 1/2-ton trucks, and Saltillo, Mexico, which builds the 2500 through 5500-series heavy-duty trucks. Although there is pressure within the company to build a third plant to relieve Warren and Saltillo, Fiat Chrysler Automobiles CEO Sergio Marchionne's preference is reportedly to pick up the pace on the lines of the existing factories and run them "flat-out" to maximize output.
New factories can cost in the hundreds of millions, if not billions to build, and can take decades to recoup the fixed costs, as well as the issue of what to do with them when industry-wide sales, or demand for that particular model drops off. If there's an uncertain outlook ahead for trucks, utilizing existing factories to maximize output makes more sense. But if truck sales are expected to continue to climb for the foreseeable future, an additional plant might not be the worst investment.
Source: Automotive News