TORONTO — Chrysler said Tuesday it will take steps to build new cars and minivans in Ontario province without incentives from the Canadian government and is withdrawing requests for financial aid for plants in Windsor and Brampton because the projects have become a “political football.”
Chrysler now builds minivans at the Windsor plant and big cars in Brampton.
Chrysler has been talking to the federal and provincial governments about an incentive package that will help offset higher wages in Canada.
The company said that it will start the process of upgrading the Canadian factories with its own capital. But spending the money will depend on Canada’s competitiveness with other global factories.
“The thing I really regret most about this issue in Canada and province of Ontario is that unfortunately it has been picked up as a political football in the country. It is being bandied around as if it has become an ideological albatross,” Fiat Chrysler Automobiles chief executive Sergio Marchionne said in Windsor, Ontario on Tuesday.
Ontario is facing a possible election this year and opposition Conservative leader Tim Hudak has called Chrysler’s aid request corporate welfare. Hudek has said Ontario is being held hostage.
“We are surprised by this news because we have had good, productive discussions with Chrysler,” said Jason MacDonald, a spokesman for Canadian Prime Minister Stephen Harper. “Clearly Chrysler is concerned with the political situation at the provincial level. We remain committed to our automotive policy and the funding announced in the budget to help the sector remain competitive.”
Marchionne, a dual Canadian and Italian citizen, said he regrets doing a poor job explaining the competitiveness of manufacturing alternatives that are available to automakers in other jurisdictions. He said last month at the Canadian International Auto Show in Toronto that Canada must decide if it wants the plants, and that the United States and Mexico are desperate for the investment.
Marchionne has declined to disclose financial details, but he has said it would be the single largest investment made by the auto maker since it emerged from bankruptcy five years ago. The Globe and Mail reported he’s seeking $700 million in Canadian government aid as part of a $3.6 billion investment.
Chrysler has 3,242 employees at its Brampton plant which makes the Chrysler 300, Dodge Charger, Dodge Challenger and Lancia Thema. It has 4,663 employees at its Windsor plant that makes the Dodge Grand Caravan and Chrysler Town & Country, the Ram Cargo Van and Lancia Grand Voyager.
Canadian Finance Minister Jim Flaherty announced in the federal budget last month $500 million in financial aid over two years for Ontario’s auto sector. Flaherty said Chrysler was making a big request but said he’s an adamant supporter of the auto sector. The federal Canadian and Ontario province governments worked in tandem with the U.S. government on auto bailouts in 2009 to maintain Canada’s 17 percent share of North American auto production. Canada contributed $2.9 billion to the bailout of Chrysler in 2009.
The auto companies have said in recent years that Canada was the most expensive place in the world to make cars and trucks, and warned they could move production south if the Canadian Auto Workers union didn’t cut costs. Canada’s advantages in the past — a weak Canadian dollar and government health care — are not as strong as they once were compared to U.S. factories.
Canadian auto union Unifor President Jerry Dias said in a statement it is regrettable that Chrysler withdrew its request for financial assistance from the federal and provincial governments, but said they are pleased Chrysler will invest in the plants.
“We are deeply concerned, however, that in the long-term we are going to lose an incredible opportunity to secure Ontario’s manufacturing industry well into the future,” Dias said.