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Fiat Chrysler’s $325-million investment a major victory for Brampton plant

Chrysler Canada's Brampton Assembly plant is seen April 30, 2008.

Peter Jones/Reuters

A $325-million investment that Fiat Chrysler Automobiles NV has agreed to make for a paint shop in Brampton, Ont., is a win that Unifor and its predecessor union, the Canadian Auto Workers, have been seeking for decades.

While a new paint shop at the company's Brampton facility does not guarantee a secure future – investment promises from other generations of Chrysler leaders have vanished the moment vehicle markets turned – it is a key first step in positioning the 30-year-old plant to win a mandate to produce a new generation of vehicles.

"If you've got a new paint shop, you're utilizing it," Unifor president Jerry Dias said on Tuesday, hours after securing a last-minute tentative contract agreement with the company that includes the promise for the paint shop. "It isn't any more complicated than that."

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The Fiat Chrysler deal is the second win for Mr. Dias in the first two contracts in the current set of negotiations. General Motors Co. signed a deal last month that will lead to new vehicles for a plant in Oshawa, Ont., that will help keep it in operation beyond its scheduled closing in 2019.

The two wins represent at least a temporary halt to the steady erosion of vehicle manufacturing in Canada, although a major decline in sales from the current record-high levels could put the plants in jeopardy again early in the next decade.

The financial support of the Ontario and federal governments will be important, Mr. Dias said, in helping make sure the paint-plant investment is followed by new mandates from the company to produce vehicles at the Brampton plant. Auto companies seldom redevelop their facilities to build new vehicle lines in North America without some form of government financial assistance.

He said he is working on setting up a meeting between Fiat Chrysler chairman Sergio Marchionne and federal officials.

"Product mandate is the key," Ray Tanguay, special adviser on the auto industry to the Ontario government and former chairman of Toyota Motor Manufacturing Canada Inc., said on Tuesday.

The relationship between Fiat Chrysler and the federal government became strained in 2014, when the company proposed a $3.6-billion redevelopment of both its Canadian assembly plants but later walked away when its request for government help ran into protracted negotiations with the federal government and became a political football in Ontario.

Fiat Chrysler went ahead on its own with a $1-billion investment at its plant in Windsor, Ont., to build a new generation of minivans, but delayed decisions on the Brampton facility.

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The Ontario government announced a retroactive grant of $86-million for the Windsor project earlier this year, but Ottawa did not contribute anything. Fiat Chrysler Canada president Reid Bigland said during an announcement about the provincial support that the federal government should be asked why it was not contributing.

Since then, the federal government has agreed to change the terms of the Automotive Innovation Fund, which was regarded as a negative factor when it came to investment because instead of grants, the program offered loans that were treated as revenue and subject to tax.

In terms of federal help, "there's a new game in town," Mr. Dias said. "There's no question that [former Conservative prime minister Stephen] Harper was a disaster for the auto industry. The messaging coming from the feds is much different."

The future of the cars now assembled in Brampton is in some doubt because stringent new environmental regulations scheduled to come into place early in the next decade will require better fuel economy than the rear-wheel-drive Chrysler 300 and Dodge Charger and Challenger now offer.

But a new platform – or basic underbody – could be earmarked for Brampton, Joe McCabe, who heads industry consulting firm AutoForecast Solutions LLC, said on Tuesday.

The new platform, named Giorgio, provides the base for the next generation Challenger and Charger and for models for Fiat Chrysler's luxury Maserati and Alfa-Romeo divisions, Mr. McCabe said.

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"That platform is flexible enough to have a crossover," he said. "It only makes logical sense if you're going to make an investment in the plant and keep it open for longer than four years, that you put in a crossover."

The consulting firm expects Fiat Chrysler to stop making the Chrysler 300 by 2018, although union sources said that issue did not arise during the negotiations.

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