Chrysler Group LLC chief executive officer Sergio Marchionne insists he’s not threatening to pull the company’s two assembly plants out of Canada. But he does point out that Mexico and some U.S. states are coveting the $3.6-billion investment the auto maker is proposing to make here.
“We have been approached by a number of jurisdictions that have an interest,” Sergio Marchionne, Chrysler president, told reporters Thursday at the Canadian International Auto Show in Toronto. He would not reveal how much financial help those jurisdictions will offer, but said it’s “in all likelihood, more than would be otherwise available from my Canadian proposal.”
The prospect of competition from Mexico or U.S. states represents a potential wild card in negotiations between Chrysler and the federal and Ontario governments. Mexico and states such as Alabama and Tennessee have provided hundreds of millions of dollars to auto makers for individual plants and billions overall to the industry. In the case of Mexico, the allure includes rock-bottom wages and trade deals that give access to Latin American markets.
The potential competition for the investment serves as a reminder of how Canada has been an afterthought for much of the auto industry since the two governments contributed $13.7-billion to bail out Chrysler and General Motors Co.
As reported by The Globe and Mail last April, global auto makers invested $42.3-billion (U.S.) in North America between 2010 and 2012. Just $2.3-billion of that money, or 5.4 per cent, was spent in Canada.
There must be a structural problem with Canada that explains why this country is less appealing, Mr. Marchionne noted, but he said he cannot identify a reason.
Chrysler is proposing to spend $3.6-billion (Canadian), with $2.6-billion of that devoted to a new generation of minivans and retooling of its Windsor, Ont., plant to build them, plus another $1-billion to refresh the large cars assembled in Brampton, Ont., sources familiar with the proposal have said.
Mr. Marchionne declined to discuss the figure, but he described the proposal as the biggest single investment the combined Fiat Chrysler group has made since Fiat took control of Chrysler in 2009.
“We’ve got to decide whether you want this or not,” he said. “We’re at the table. The car is ready. We’re ready to build minivans – somewhere,” Mr. Marchionne said, adding that in the automotive industry, Canada is “a guppy in shark-infested waters.”
He also would not reveal how much financial help Chrysler wants. The company is seeking at least $700-million, sources have said. The negotiations with the governments included a visit by Mr. Marchionne to Prime Minister Stephen Harper on Tuesday before the federal government unveiled a budget with a $500-million infusion of money over two years into the government’s Automotive Innovation Fund.
One of the issues for the governments is to determine how much of the $3.6-billion will be spent in Canada and thus eligible for the traditional 20 per cent funding they have provided. In recent projects, the federal government has provided repayable loans while the Ontario government offered grants.
Mr. Marchionne said Thursday that taxpayer money for Chrysler’s projects will be repaid.
The Fiat Chrysler CEO reminded reporters, dealers and other industry officials at the official opening of the Toronto show that he grew up in the city.
“I am Canadian,” he said. “I’d do a variety of things for this place that will twist me into a pretzel.”