Chrysler picks Windsor to build minivans, spurns government money
Company CEO Sergio Marchionne says $2B decision became a 'political football'
Chrysler will continue to build its popular minivan in Windsor, Ont., and has withdrawn all requests for government financial assistance in relation to the redevelopment of its assembly plants in Windsor and Brampton.
Chrysler directly notified Prime Minister Stephen Harper and Ontario Premier Kathleen Wynne of its decision.
At the Detroit auto show seven weeks ago, Chrysler CEO Sergio Marchionne said that changes at the Windsor plant alone would cost at least $2 billion, and that Chrysler needed government help to finance the project.
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Chrysler said in a media release Tuesday it will now "fund out of its own resources whatever capital requirements the Canadian operations require."
Industry Minister James Moore said the government’s commitment to the auto industry is strong and he was surprised by Chrysler’s decision.
“We’ve been having very good conversations with Chrysler about their future in Canada,” Moore said from Ottawa.
“They’ve made a decision to push away from the table, principally because of concerns about the political dynamic in the province of Ontario, quite frankly. So it’s a surprise to us, but it’s a judgment that they have to make as a company,” he added.
What more can we do? I was told all was going well.—Essex Conservative MP Jeff Watson
Essex Conservative MP Jeff Watson, whose riding is just south of Windsor, said he believed talks were going well.
“We were prepared to invest in exchange for guarantees for Canadian production and a Canadian supply chain,” Watson said.
Watson said the purpose of the $500 million dedicated to the Automotive Innovation Fund in last month’s budget was to back up the government’s commitment to Chrysler.
“What more can we do? Discussions were proceeding well,” Watson said.
Watson said Chrysler now has “to clarify the level and extent of the investment.”
In the same release, Chrysler confirmed it will continue to build its flagship minivan at the Windsor Assembly Plant and also continue to run the Brampton plant, where the company builds sedans.
Our commitment to Canada remains strong.—Chrysler CEO Sergio Marchionne
“Our commitment to Canada remains strong,” Marchionne said. “We have been active participants of the Canadian economy for nearly 90 years, both as a manufacturer and as a seller of cars, trucks and vans.
"It is clear to us that our projects are now being used as a political football, a process that, in our view, apart from being unnecessary and ill-advised, will ultimately not be to the benefit of Chrysler," the company said in a news release.
"As a result, Chrysler will deal in an unfettered fashion with its strategic alternatives regarding product development and allocation, and will fund out of its own resources whatever capital requirements the Canadian operations require."
In February, Ontario Progressive Conservative Leader Tim Hudak accused Marchionne of holding the Ontario Liberals for "ransom."
Last week, Windsor Mayor Eddie Francis began a countrywide newspaper ad campaign touting the benefits of investing in the auto industry.
After reading the Chrysler statement, Francis said, “It’s a very well-worded letter. It has a number of messages included.”
“We have to recognize, as a country, that automakers can move their plants, their investments, their technology, their capital around the world with a click of the button.
“Chrysler is a significant part of our industry, it’s our top industry, and we want to protect it.”
In his news release Tuesday, Marchionne said, "It is my sincere hope that all stakeholders involved commit to do what they can to preserve the competitiveness of the country, and in particular of the province of Ontario,"
"We will do what we can to preserve and nurture the competitiveness of our operations, but we reserve the right, as is true for all global manufacturers, to reassess our position as conditions change.”
Jobs saved in 2 cities
Choosing Windsor saves thousands of well-paying jobs in southern Ontario. It should secure 4,600 hourly jobs in Windsor and nearly 3,000 in Brampton.
“At this stage, Chrysler really has nowhere else to build that minivan. They have no other facility in North America they could move the minivan to,” said auto analyst Tony Faria. “Windsor is the only place in the short run where it could be built. But the announcement doesn’t go so far as to say Chrysler is going to make the up to $2.3-billion makeover at the plant they have been talking about.”
According to the Ontario government, the auto sector employs 94,000 Ontarians, and supports as many as 500,000 families through indirect jobs.
Ontario’s Minister of Economic Development, Trade and Employment Eric Hoskins praised Chrysler's decision.
"We welcome Chrysler’s decision that it will begin to invest in the next generation of vehicle production at its plants in Windsor and in Brampton," Hoskins said in an emailed statement. "We will continue to work positively and proactively with Chrysler and with other auto companies to partner in a fiscally responsible way to attract new investment, new jobs, and new product lines to Ontario."
Union wants government support
Unifor Local 444 president Dino Chiodo, who represents hourly employees in Windsor, said he wasn’t completely surprised by Marchionne’s announcement.
“I heard he was probably going to make a decision sometime in March,” Chiodo said Tuesday.
When Marchionne asked for government assistance, Chiodo said, he was not asking for a government handout.
“The money is paid back in full. It’s a way to make sure there is enough money to make sure the investment occurs and takes place and it gets paid back,” Chiodo said. “It is not a handout.”
Chiodo said Tuesday's announcement is short of the $2-billion retooling and flexible manufacturing line employees were looking for in Windsor.
In the short term, I can say Windsor's good.-—Unifor Local 444 president Dino Chiodo
“My concern is the amount of investment. From this letter, it sounds like he’ll put just enough in to create the intervention to make sure we have the next product. In the short term, I can say Windsor’s good. In the long term, I question that and I’m not really sure,” Chiodo said.
“The government’s role now is to get a hold of Marchionne and say we want to participate in investment. Then we could talk about the flex manufacturing in Windsor Assembly Plant like was originally planned."
Chiodo said a $2.3-billion investment would secure three generations of minivans, which could secure jobs for decades.
"That's why I think it's important the government open the communication and say 'we're there,'" Chiodo said.
'More uncertain today'
Unifor Local 444 quickly held a conference call with executives who were gathered in Port Elgin for a meeting.
Unifor Local 444 vice-president Mike Lovric called the announcement “a kick in the ass.”
Former CAW national president Ken Lewenza, now retired, was in on the call.
“We feel more uncertain today than we did two years ago,” Lewenza said.
Chiodo has sent a letter to Chrysler, asking for a meeting with Marchionne.
Marchionne also wants union concessions.
Of particular importance for this evaluation will be the outcome of our collective bargaining negotiations that will be carried out in 2016 with Unifor," the company said Tuesday.
Chiodo said Marchionne has not yet approached the union to ask for concessions.
"I would expect Marchionne would have that conversation going into collective bargaining in 2016," Chiodo said. "He might be looking for the shortfall of the government [investment]."
With files From CBC News