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Marchionne sends a harsh message to Canada

Chrysler withdraws request for financing from feds and province - but that's not the end game

Published: March 4, 2014, 8:45 PM
Updated: April 29, 2018, 2:45 PM

Sergio Marchionne

In a surprise move, Chrysler announced today that it has withdrawn its request to the Canadian and Ontario governments for financial assistance with respect to the development of its two assembly plants in Windsor and Brampton, Ontario.

Chrysler remains committed to both plants, for now, but for how long remains an open question.

"It is clear to us that our projects are now being used as a political football, a process that, in our view, apart from being unnecessary and ill-advised, will ultimately not be to the benefit of Chrysler," the company said in a statement.

Chrysler has been negotiating with both governments for several months and although Sergio Marchionne, CEO of Fiat Chrysler Automobiles (FCA), has repeatedly stated his desire to keep those negotiations behind closed doors, they have become fodder for both media and political gamesmanship.

He cautioned against those dangers, both during a press conference at the North American International Auto Show (NAIAS) in Detroit in January and at the Canadian International Auto Show (CIAS) in Toronto last month.

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Marchionne, who was raised in Toronto and holds both Canadian and Italian citizenship, attended the CIAS to deliver the keynote opening address on behalf of the industry. Following his speech there he was besieged by media questions about the validity of the company's request for government assistance.

He pointed out that what Chrysler was requesting in Canada was not a handout but an investment with a very real payback.

He also noted, as he has done on several occasions, that there is fierce competition from jurisdictions all over the world for auto plant investment and huge incentives from many for locating in their territories. It's the reality of doing business today.

In today's statement, Marchionne said: "On a personal note, 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.

"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. It is clear that we, at Chrysler, need to do more to explain ourselves and our choices going forward."

According to today's statement, "Chrysler will fund out of its own resources whatever capital requirements the Canadian operations require."

The company confirmed its intention to begin allocation of the next "people carrier" architecture (the so-called next minivan and derivatives) to Windsor.

But it cautioned that, these capital allocation decisions will be dependent on Canada competitiveness both within NAFTA and, increasingly, on a global basis.

Of particular importance, the statement emphasized, will be the outcome of collective bargaining negotiations with UNIFOR (the union resulting from the merger of the CAW and CEP) that will take place in 2016.

The statement also confirmed the ongoing allocation of the current Chrysler 300 and Dodge Charger and Challenger family of vehicles, including what it called "substantial product intervention" in the near term.

"Our commitment to Canada remains strong," said Marchionne. "We have been active participants of the Canadian economy for nearly 90 years, both as a manufacturer and as a seller of cars, trucks and vans. It is my sincere hope that all stakeholders involved commit to do what they can to preserve the competitiveness of the country, and in particular of the province of Ontario."

He cautioned however: "We will do what we can to preserve and nurture the competitiveness of our operations, but we reserve the right, as is true for all global manufacturers, to reassess our position as conditions change."

In case that message isn't clear to the powers that be, it means that Chrysler's ongoing presence here is far from guaranteed. It, and the thousands of jobs that go with it, will have to be earned against fierce competition on a global scale.

Lest there be any doubt of that reality, one needs only to look at Australia, whose once booming auto industry – similar in many ways to Canada's – is scheduled to disappear completely within the next few years.