TORONTO/DETROIT: 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 $2.9bn 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 carmaker’s commitment to Canada.
Chrysler, which had reportedly sought $700m in support toward a $3.6bn 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 4,600 workers.
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 planned. Now that Chrysler has decided to invest in Canada, it is unlikely to change its mind unless forced by market conditions, said a source.
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.
Canada has been a generous supporter of the sector, he said, pointing to last month’s announcement of $450.07m 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.” Reuters
