Chrysler Group LLC is proposing a major $3.6-billion retooling of not one but two Canadian auto plants as it enters high-stakes negotiations with the federal and Ontario governments for financial assistance.
The auto maker wants to spend about $2.6-billion at its Windsor plant to retool it for a new generation of the company’s minivans and invest an additional $1-billion at its Brampton factory, which assembles the Chrysler 300 sedan and other large cars, according to sources familiar with the situation.
Reid Bigland, president of Chrysler Canada Inc., who is in Toronto to kick off the Canadian International Auto Show Thursday with Chrysler CEO Sergio Marchionne, said he cannot comment on the discussions with the government.
The Globe and Mail reported Tuesday evening that Chrysler is seeking a contribution of at least $700-million from Ottawa and Queen’s Park before it goes ahead with the makeover of its Canadian operations.
The federal government raised hopes in this week’s budget when it announced it would pour another $500-million over the next two years into its Automotive Innovation Fund. However, the federal cabinet minister in charge of auto industry assistance cautioned Wednesday that while Ottawa is having “active discussions” with Chrysler, nobody should assume the new auto fund cash in this week’s budget is destined for the auto maker.
Industry Minister James Moore says he wants to see Chrysler pledge a “long-term commitment” to assembling cars in Canada. But he emphasized that Ottawa has made no promises about assistance. It wants job guarantees and other promises from any auto makers that hope to tap the fund, the minister said.
“Contrary to some of the speculation that’s out there, none of the money that’s been set aside in the Automotive Innovation Fund is earmarked for anybody,” Mr. Moore said in an interview with The Globe and Mail.
Ottawa still has nearly $180-million left in previously-announced funding for the auto industry. That means there’s now about $680-million available for companies to tap. Repayment terms on previous federal contributions have often been generous, allowing for up to 20 years to reimburse Ottawa.
Mr. Marchionne has said the governments need to decide if they want the investment, which would protect about 5,000 jobs in Windsor and another 3,000 in Brampton, operations overseen by Chrysler Canada president Reid Bigland.
Mr. Moore said he’s not going to be rushed into anything. “There’s a lot of money on the table. It doesn’t have to be spent,” Mr. Moore said. “We spend it if it’s in the best interests of the Canadian economy.”
The minister appears to be trying to firm up his bargaining position in the wake of widespread assumptions in the media after Tuesday’s budget that Chrysler has a lock on government assistance.
“If there is an arrangement that makes sense for Canadian taxpayers – where there is agreement with the province of Ontario to move forward and we can get covenants and commitments to the Canadian marketplace and supply chain, job commitments and so on – then it’s something we undertake,” he said.
Speaking earlier Wednesday to reporters at a post-budget event, Finance Minister Jim Flaherty said Chrysler is making a big request of Canadian governments.
“The demands by Chrysler are substantial and you can ask Chrysler about that,” he said.
Mr. Flaherty said the request is no trifling matter and Ottawa has to weigh applications for assistance with great care.
“This is the largest manufacturing sector in Ontario. This is not to be treated lightly. It’s not so much the thousands of people who work in the assembly plants. It’s all the people that depend on the plants, that work around the plants … the suppliers, the restaurant owners, the truck drivers.
“There’s lots of people who depend on these large industries so I’m very slow to let them go and I probably, in terms of my colleagues, am the most adamant in support of auto manufacturing as a hub for employment in Canada.”