Tax cuts remove 'cobwebs' for US companies: Fiat Chrysler CEO
Fiat Chrysler Automobiles (NYSE:FCAU) CEO Sergio Marchionne said Monday the tax reform bill, which encouraged the automaker to hand out $2,000 bonuses to employees, is a boon to the U.S.
“The tax reform that was done in December went a long, long way in giving a huge jolt of confidence to this country,” CEO Sergio Marchionne said in an interview with FOX Business’s Jeff Flock at the Detroit auto show. “I am hopeful, I am sure, we are one of many companies that will try and emulate what we’ve done, obviously in their own fashion.”
Fiat Chrysler announced last week that it will distribute the special bonuses and move production of Ram heavy-duty pickup trucks from Mexico to Michigan, citing the $1.5 trillion tax-cut package signed by President Donald Trump. In addition to reducing individual tax rates, the bill lowered the corporate rate to 21% from 35%. Dozens of companies, including Wal-Mart (NYSE:WMT) and AT&T (NYSE:T), have revealed plans to give employees special bonuses in 2018 as a result of the bill’s passage.
While the tax bill wasn’t the only reason behind Fiat Chrysler’s recent moves, it allowed the Italian-American automaker to move forward with employee bonuses and an additional $1 billion investment in its Warren, Michigan, truck plant. The investment will create 2,500 new jobs that will support the expansion of production when the heavy-duty trucks arrive in 2020.
“I think it was a morally-owed thing to do at some point in time. I think tax reform made it unquestionably due now. And so it helped that thinking process,” Marchionne said of the tax bill. “We removed all the cobwebs, and all the concerns we had about when and if to do it, so I’m glad we’ve done it.”
Ford (NYSE:F) CEO Jim Hackett told Flock that the Blue Oval has no plans to provide a one-time bonus related to tax reform.
Automakers are in Detroit for the North American International Auto Show this week to introduce new models, including some of the best-selling trucks.
Fiat Chrysler unveiled the next generation of Ram 1500 pickup trucks, while General Motors (NYSE:GM) brought its new Chevrolet Silverado 1500 to the show. Ford’s midsize pickup, the Ranger, also took the stage ahead of its return to market in 2019.