PLANT

Marchionne optimistic about investment in Chrysler expansions

Automaker is looking for $700 million from Ottawa and Ontario for Windsor and Brampton plants.


TORONTO — Chrysler isn’t yet close to a deal that will secure “significant” investment in its Ontario plants, but its chief executive said he was optimistic a funding arrangement could be worked out with Ottawa and Ontario.

“We’re approaching this with the best of intentions, I think we can bring it to a successful conclusion,” Sergio Marchionne said after kicking off the Canadian International Auto Show in Toronto.

“We have all the makings of a potential successful transaction. You need to let the parties work diligently at carving out what is best suited for the Canadian government, the province of Ontario and Fiat-Chrysler.”

Marchionne would not confirm reports that Chrysler was looking for $700 million from the governments as part of an overall investment of $3.6 billion, but he said that if the proposal goes through, it will represent the “single largest investment made by any auto maker in this country in a number of years.”

Chrysler said last month it was considering a billion-dollar upgrade at its Ontario plant to build a new minivan, but it was in talks with the government about an incentive package that would help offset higher costs in Canada. The Chrysler assembly plant in Windsor, Ont., produces the Dodge Grand Caravan and Chrysler Town & Country minivans as well as several other vehicles.

Marchionne said its proposal would also involve its plant in Brampton, Ont., which builds the Dodge Charger, Challenger and Chrysler 300.

The federal government said in its budget that it had set aside an additional $500 million for the Automotive Innovation Fund, but did not release details. The fund was launched in 2008 with a commitment of $250 million over five years and renewed last year for another five years.

Chrysler is about halfway to getting what it’s seeking, Marchionne said, but added that other jurisdictions – including the US and Mexico – have approached the auto maker since its expansion plans became public. He cautioned that when it comes to the globally competitive industry, Canada can’t be a “guppie in shark-infested waters.”

“This is not a game for the faint-hearted,” he said. “It takes resolve and it takes cash.”
Canada has to decide whether it wants to maintain a role in the auto sector or not, he added, noting that over the past five years less than 5% of the $42 billion invested in North America by auto makers was won by Canada.

“I am Canadian. I’ll be cheering for Canada. I’ll do a variety for things for this place that will twist me into a pretzel, but you can’t put me over a barrel,” he said. Marchionne was born in Italy but grew up in Toronto, where his mother still lives.

Ottawa and Ontario spent billions in bailouts for Chrysler and General Motors after the recession hit in 2009. The auto sector has since rebounded, but large government incentives for automakers to build plants in the US and Mexico, favourable trade agreements between Mexico and other countries and higher labour costs continue to hurt Canada’s chances to win production.

Marchionne said he realizes funding of the auto sector can be a sensitive issue, but said this investment is also one that would be repaid.

“The question is not giving away money. The question is creating the conditions for the manufacturing sector to continue to be a viable ingredient of the Canadian economy,” he said.

It didn’t appear that Marchionne would face much competition for the cash from the other Big Three car makers within Canada, with both Ford and General Motors saying they weren’t expecting to make any new requests of the government at this time.