The automotive industry is a global industry. In the Canadian market, there are 20 global automotive companies from around the world who compete for sales. Of these 20 companies, only five build automobiles in Canada.
One of those five companies is Chrysler Group LLC. In 2013, Chrysler built 570,000 vehicles in Canada, which represented approximately 25 per cent of the country’s total automotive manufacturing output. The company began 2014 as the No. 1 seller of vehicles in Canada. Perhaps more importantly, Chrysler supports Canada – we directly employ 10,000 people, annually purchase more than $3.2-billion from Canadian suppliers and pay several hundreds of millions in annual taxes.
A few months ago, Chrysler began to contemplate a significant investment in Chrysler’s Canadian operations. Chrysler has already made significant investments in the region, and is proposing to increase its commitment to Canada at a level unprecedented by any of its competitors. To put it in perspective, the magnitude of this investment exceeds all investments by the entire automotive industry in the country over the past five years. The investment will create and secure tens of thousands of Canadian jobs and is expected to generate hundreds of millions of dollars of future tax revenues.
In light of the federal government’s and the Ontario government’s past practices of providing support through automotive funds, which is consistent with that of every global automotive jurisdiction around the world, Chrysler Canada approached the governments to assess their level of interest in the investment. Traditional automotive-related support from those governments, received by several of our competitors (including General Motors, Ford and Toyota) has taken the form of taxable, repayable loans from the federal government and grants from the provincial government.
To succeed in a global automotive business, Chrysler must ensure it is globally competitive, and for Canada to succeed, it too must ensure it is a globally competitive jurisdiction in attracting and retaining businesses. Over the past 10 years, Canada has struggled to hold on to its manufacturing competitiveness as evidenced by manufacturing closures and the fact that over the past five years there have been $42-billion of automotive investments in North America, while only $2.4-billion of that has been invested in Canada. Clearly, our ability as a country to retain and attract manufacturing investments is severely challenged. During this same period, Chrysler has steadily grown its operations and has remained very much committed to Canada.
We remain forever grateful for the loans we at Chrysler received from the federal and Ontario governments in connection with our 2009 restructuring. We are equally proud of the fact that we fully honoured our commitments on those loans and repaid them six years ahead of schedule. While it is true that there were other loans made to the Old Chrysler company pre-bankruptcy, it is equally true that new stakeholders in Chrysler Group LLC and its management did not have any direct say in the amount or the purpose of these pre-bankruptcy loans, and it would thus be inequitable to hold them liable or responsible for their repayment.
It is unfortunate to read how some self-proclaimed experts have sought to demonize Chrysler’s contemplated investment. The shame in all of this is the fact that virtually all of the automotive companies who invested more than $40-billion in Mexico and the United States over the past five years never even bothered to ask Canada if it was interested in helping to bring these investments and jobs to Canada.
Our discussions with both levels of government are professional and cordial. We remain optimistic that our investments will move forward and help to secure and create thousands of precious, well-paid jobs in Canada, and help to generate hundreds of millions of dollars of future tax revenues for many years to come.
Sergio Marchionne is CEO of Chrysler LLC and Fiat SpA
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