* Fiat CEO says call for support became "political football"
* Plans to produce next-gen minivan in Windsor will proceed
* Brampton will benefit from revamped models
* Fiat CEO says other countries hope to lure minivan
By Susan Taylor and Bernie Woodall
TORONTO/DETROIT, March 4 Chrysler Group LLC said
on Tuesday that it would push ahead with development plans for
two key assembly plants in the Canadian province of Ontario, but
will keep its "strategic options" open after withdrawing
requests for government funding.
Chrysler, a unit of Fiat Chrysler Automobiles, said
its appeal for cash from the governments of Canada and Ontario
had become a "political football," showing the country's
short-sighted view of industrial development.
Pressure began building around the issue in January, after
Fiat Chief Executive Officer Sergio Marchionne said that
Canadian governments needed to step up with financial incentives
in order to secure Chrysler's investment plans. Back in 2009,
the two levels of government had contributed about $2.9 billion
toward Chrysler's bailout.
"As a Canadian, I regret my failure in having been unable to
convey the highly competitive nature of markets that offer
manufacturing opportunities to carmakers that operate on a
global scale," said Marchionne in a statement. Marchionne has
dual citizenship in Canada and Italy.
"Some of the shots across the bow following our initial
approaches to the federal and provincial governments
reveal, apart from political convenience, a somewhat restricted
view of Canada as an industrial player in what has
become a borderless economy."
Marchionne also said he hoped all stakeholders would
preserve the country's and province's competitiveness, but
reserved the right to reassess Chrysler's position if conditions
changed. Some analysts and industry experts said that Marchionne
was angling for a better position in negotiations by raising
questions about the automaker's commitment to Canada.
Chrysler, which had reportedly sought $700 million in
support toward a $3.6 billion investment, said it will still go
ahead with plans to develop and produce its next-generation
minivan at its Windsor, Ontario, plant, which employs more than
It will also produce revamped models of its Chrysler 300,
Dodge Challenger and Dodge Charger at a Brampton, Ontario,
facility, which has nearly 3,250 employees.
The company did not detail the scope or duration of that
production work, nor did it discuss spending plans. It was
unknown whether Chrysler would now invest less than originally
Now that Chrysler has decided to invest in Canada, it is
unlikely to change its mind unless forced by market conditions,
said a source familiar with the company's plans, who was not
authorized to speak on the record.
EYE ON UNION TALKS
Richard Hilgert, an analyst with Morningstar who covers
Fiat, said that Marchionne's latest move was "definitely
"It means that if the Canadians are not willing to play ball
with him, he will go play in another country when it comes time
to make new investments beyond what Chrysler already has in
motion," he said.
"Canada still has an open door to come back to the table and
if there is a political will to reopen negotiations with
Chrysler, I'm sure Mr. Marchionne would be more than willing."
Minister of Industry James Moore said that Chrysler's
decision was a "surprise" and that the Canadian government has
been having good conversations with the company about their
future in Canada.
"(Chrysler has) made a decision to push away from the table
for now, principally because of concerns with the political
dynamic in the province of Ontario," he said.
Canada has been a generous supporter of the sector, he said,
pointing to last month's announcement of C$500 million ($450.07
million) in new subsidies for an auto innovation fund.
A spokesman for Ontario Minister of Economic Development,
Trade and Employment, Eric Hoskins, said the province would
continue working "positively and proactively" with Chrysler in a
"fiscally responsible way."
Chrysler said that it would continuously monitor its capital
spending plan to measure Canada's competitiveness against
countries around the world. It said contract talks in 2016 with
workers represented by Canadian union Unifor would be
"Knowing what he's got ahead, negotiating with Unifor,
(Marchionne) probably determined this is not the right time to
pressure the Canadian government in talks for this money," said
Sean McAlinden, chief economist at the Center for Automotive
Research in Ann Arbor, Michigan.
"If you lock up renewing these plants ahead of the new labor
agreement, you have nothing to pressure the union with."
Historically, the union has lobbied the Canadian and Ontario
governments to subsidize plants, which helps to offset Canada's
higher labor costs.
Jerry Dias, national president of Unifor, a union
representing more than 39,000 workers in the country's auto
sector, said that comments by the leader of Ontario's opposition
Conservative Party had infuriated Chrysler.
Tim Hudak, leader of the Conservative Party in Ontario, said
last month that government should reject the company's request
for a "billion-dollar taxpayer handout" and instead lower taxes
to create jobs.
Dias said that Chrysler's decision to pull its appeal for
funds was regrettable and demonstrates the need for a long-term
government auto strategy that includes public investment.
"Countries that don't understand the importance of the
industry generally don't have an industry in the long term,"
Dias said. "That's clearly his (Marchionne's) message."
COMPETITION FOR VAN PLANT
Marchionne, who attended university in Windsor, said earlier
on Tuesday that the process of deciding what to do in Canada was
slowed by politics, which he called an "ideological albatross."
While Windsor is Chrysler's only minivan assembly operation,
Marchionne recently said that representatives from countries
including the United States and Mexico had approached the
automaker in hopes of luring away the production.
The Windsor assembly plant, built in 1928, was home to the
world's first minivan in 1983.
The Globe and Mail has reported that upgrades to the Windsor
plant will cost $2.6 billion with another $1 billion spent at
Brampton. The newspaper also reported that Chrysler told
governments in Canada it wanted $700 million before proceeding.