The Windsor Assembly Plant has built Chrysler minivans for 30 years but that streak may end if government incentives are not proffered.
A Conservative member of the Canadian parliament representing the riding [district] of Essex, a suburb of Windsor, Ontario just across the river from Detroit, says that the federal government will not yield to Chrysler and Fiat CEO Sergei Marchionne's negotiating tactics. On Monday, speaking to the media at the Detroit auto show, Marchionne said that Chrysler's decision on whether or not the company will invest billions of dollars into keeping the Windsor minivan plant operating using a new global vehicle platform will depend on whether or not the Canadian and Ontario provincial governments will come up with an economic package that makes that investment worthwhile.
"This commitment that we're making is a multibillion dollar commitment," Marchionne said. "We have to resolve the issue about the competitiveness of this investment in Windsor. So, I have to make sure the environment and the conditions that support the investment are adequate to ensure a proper return on our capital. That means labour costs, that means everything."
In response, on Tuesday, parliamentarian Jeff Watson said, "The government doesn't respond to threats.If Mr. Marchionne opens dialogue about investment, it will be evaluated on the basis of the proposal, not what's said in newspapers."
MP Watson said that the government's willingness to help the Canadian auto industry was shown by the $250 million (Canadian) Automotive Innovation Fund, created in 2008. Last year that fund, along with the Ontario provincial government, put up $142 million toward Ford Motor Company's $700 investment in the expansion of its Oakville plant, 20% of the total cost. Watson, who sits on the Conservative auto caucus as well as the parliamentary transport committee, said that a 20% share of the presumed $1 billion investment into the Windsor Assembly plant would total about $200 millon.
"If Chrysler is asking for $200 million, that would be one of the largest asks of the federal and provincial governments, other than the bailout of Chrysler and General Motors," said Watson, who also outlined benefits to assembling cars in Canada, which recently has been one of the more expensive places to build cars.
Canada allows 100% direct investment, as opposed to requiring a local joint venture partner, as China does. Locating in Canada also gives free trade access to the United States market. "We also have the lowest corporate tax rates among G7 countries. Investing in Canada is a value proposition. It's not just about a grant, [from the government]" Watson said.
But Reid Bigland, Chrysler Canada president and CEO, said Canada needs to address the reason why it's being bypassed by other countries in the region. "Over the last five years, there's been $42 billion of automotive-related investment in North America and $2 billion of that investment has gone to Canada, so the score in North America is 40 to 2.And not only that, we've been struggling from our Southwestern Ontario manufacturing base also during that five years to hold on to what we've got."
Bigland says that the Canadian government has to help make the local auto industry globally competitive, pointing to a $25 billion United States Department of Energy fund. "As a Canadian I think we need to be much more aggressive in convincing companies beyond Fiat-Chrysler to come into Canada to create well-paying jobs and then the spinoff which is largely seven to one," said Bigland, who warned that his boss' thread was not an idle one. "I take everything that Sergio says quite seriously," he said. "I've had the pleasure of working with him the last five years. Sergio is sitting on top of the corporation of Fiat-Chrysler; he's been doing business all over the world for quite some time."
Bigland said that he's concerned that the controversy over possible government assistance to the company has created undue stress for the 5,000+ employees at the Windsor area factory and for Chrysler's other Canadian workers. "I feel bad about that," said Bigland. "I think the men and women at the assembly plant and our Brampton assembly plant do an outstanding job…. The only thing I can say, is continue to stay focused, continuing to build the best minivan in the world and the opportunities have a tendency of taking care of themselves. I'm confident things are going to work out in the end."
from The Truth About Cars http://ift.tt/Jh8LjA
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