Fiat Chrysler Automobiles NV is prepared to allocate new vehicles to its Brampton, Ont., assembly plant as early as 2020 if the federal and Ontario governments provide adequate financial support for the reinvestment.
The new vehicles could be based on an existing or new Fiat Chrysler platform, according to a summary of a new labour agreement between the company and Unifor that was distributed to members of the union Sunday before they voted on the four-year contract. The workers later accepted the new contract with the auto maker by 70 per cent.
“The company commits to a next generation product or alternative product which could include an existing platform or entirely new vehicle architecture,” the summary of the contract said.
A next generation product would be replacement vehicles for the Chrysler 300 and Dodge Challenger and Charger rear-wheel-drive cars now assembled in Brampton.
The investment to prepare the plant for a new generation of vehicles is subject to obtaining financial support from the two governments, economic conditions, market demand and other factors, the summary said.
“In the event a positive business case is confirmed, it is possible an alternative product, which could including an existing platform or entirely new vehicle architecture could occur during the term of this collective agreement,” the document said.
The auto maker and Unifor reached the tentative agreement on a new four-year deal last Monday.
The deal includes a $325-million investment in the Brampton assembly plant paint shop, which is the oldest paint shop at Fiat Chrylser assembly plants in North America. Unifor and its predecessor, the Canadian Auto Workers union, have been pushing for a new paint shop in Brampton for more than a decade.
The union’s belief, borne out by decades of negotiating with the Detroit Three auto makers, is that investments in paint shops at assembly plants usually lead to the companies allocating new vehicles to the plants.
The allocation of new or replacement vehicles to Brampton would likely secure the future of the plant and 3,300 jobs for close to a decade, based on the typical eight to 10-year cycle.
A new vehicle or new generation of vehicles is on the market for four to five years before being redesigned for another cycle of roughly the same length of time.
The investment in the paint shop is not conditional on government financial help, Unifor president Jerry Dias said, and the shop is scheduled to be gutted and replaced during the 2017 summer shutdown at the Brampton plant.
Fiat Chrysler could seek total financial help of more than $400-million from the two governments, based on a potential $1-billion investment by the company in Brampton and the prevailing government support rate of as much as 20 per cent of a company’s investment.
A 2013 study done for the Canadian Automotive Partnership Council, an industry-union group set up to advise the governments, said the taxes and other revenue generated by auto plants more than repay the costs of the investments.
The study showed that $200-million in government grants to keep a 200,000-vehicle assembly plant open was repaid through income taxes and spin-off benefits within three years.
After eight years of a plant producing 200,000 vehicles annually, the government take from payroll, consumption and other taxes led to annual revenue of more than $440-million a year.
Fiat Chrysler invested about $1-billion in its assembly plant in Windsor, Ont., to build a new generation of minivans that began rolling off the assembly line earlier this year.Report Typo/Error