By on February 12, 2014

Chrysler Brampton Assembly Plant

With Canada’s federal government set to increase its own Auto Innovation Fund by $500 million CAD, a report by The Globe and Mail’s Greg Keenan now claims that Chrysler will look for as much as $700 million in government funding as part of a $2.3 billion investment in its Windsor, Ontario manufacturing facilities. In addition, the increased sum would also see funds allocated to the Brampton, Ontario plant that builds the Chrysler 300, Dodge Charger and Dodge Challenger

Together, the two plants employ about 8,000 people directly, and a recent Canada-E.U. free trade agreement could allow for Chrysler to export vehicles to Europe easier than it could from a U.S. plant. There are also political concerns regarding the optics of the current Ontario and federal governments failing to secure the direct and indirect manufacturing jobs in a vote-rich region that has been hit hard by other plant closures. On the other hand, the optics of coughing up that much money in the current economic climate is scarcely better.

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43 Comments on “Chrysler Reportedly Asking For $700 Million From Canadian Government...”


  • avatar
    CoreyDL

    So the trunk on the Challenger is pretty awful for holding things? Looks like a narrow, high lift-over.

  • avatar
    brianyates

    have Fiat/Chrysler paid back the 2008 bailout in full to Canadian taxpayers.? Perhaps it’s time for the Canadian government to have the bollocks to tell them to leave and close the door on the way out. Capitalism working well. I’d never buy a Chrysler product and don’t like some of my tax dollars going to a company that always has it’s hand out.

    • 0 avatar
      SC5door

      Then you shouldn’t buy anything made in Canada then, or the US for that matter…especially GM. Every single company has their hand out for a tax break for re-tooling, or building a new plant.

      • 0 avatar
        ect

        And not just automotive. The aircraft industry gets huge subsidies, and professional sports teams are absolutely shameless about demanding that cities provide them with free stadia (think, “welfare for billionaires”).

        In fact, every large employer goes looking for incentives from state/local government for new or expanded facilities.

        I remember speaking with a senior person in the Atlanta Chamber of Commerce about a dozen years ago. He told me that, when UPS moved their HQ from Seattle to Atlanta, they did it on their own dime, without telling anyone they were coming. Just showed up and opened for business. He’d never seen such a thing, before or since.

    • 0 avatar
      RobertRyan

      @brianyates
      Subsidies appear to be a major component of Producing an automobile in NA. So who is paying for all these subsidies?

    • 0 avatar
      wmba

      Yes, Chrysler paid off all their Canadian loans in May 2011. There was a big ceremony.

  • avatar
    DeadWeight

    I hope Canada just gives them the money, but for admittedly selfish reasons: I may have a Dodge or Chrysler product as my next vehicle, given the rate at which kids grow, and I personally believe that the workers at FiChryCo’s Canadian factories to be as diligent and careful in assembling vehicles as any workers anywhere.

    For the record, I am not enamored whatsoever with FiChryCo’s Fiat-based offerings, be they the Cherokee, Dart or whatever else, in terms of quality or fitness for my particular purposes (random musings).

    • 0 avatar
      CoreyDL

      Is the Durango made up there as well?

      • 0 avatar
        danio3834

        Durango is assembled in Detroit in the same plant as the Grand Cherokee.

      • 0 avatar
        DeadWeight

        No, made in Detroit.

        As you may know, based on a test drive and a relative buying a new one with the 3.6 & 8 speed ZF tranny, along with massively improved interior, I do love the Durango, but the jury is still out on long term durability (for those of us who keep cars for 8 to 12 years).

        I have a hunch the Durango with the Pentastar will fare well, though, although the weakest link in any modern vehicle from a cost and frequency of go-bad rate is the modern sluggish (which is one of many reasons why my last 4 vehicles have had manual gearboxes).

  • avatar
    RogerB34

    Is the funding a loan or a grant?

    • 0 avatar
      CrapBox

      It’s a theft.

    • 0 avatar
      schmitt trigger

      I don’t know for this particular case, but usually is an array of tax breaks, infrastructure funding, and very generous subsidies for transport/energy/insurance.
      Loans at a below-market-rate interest is another option.

      Sometimes no-downsizing clauses also require some sort of payroll liability if the production level falls below the break even point.

      But I’m also sure there are other “creative” financial schemes at play, which stop one millimeter short of outright dumping bags of money.

  • avatar
    MPAVictoria

    Subsidies are simply the price of competing in Automobile Manufacturing. Every country does it if they want to keep making cars.

  • avatar
    Ubermensch

    This is simply what capitalism is. This is is how it really exists and not how it exists in the mind of “Libertarian” Randian “free-market” wonks. Capitalism can’t exist any other way outside of textbooks. Risks are socialized and profits are privatized.

    • 0 avatar
      AH-1WSuperCobra

      It is not capitalism its corporatism. The politicians might pound the podium when it comes to ‘evil’ but they love it when its in their backyard and will get them votes. Politician X helps subsidize Company Y then thy get money for their next election and the CEO lands himself a nice advisor job.

      “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”

      -Mussolini

    • 0 avatar
      CrapBox

      True capitalism exists in plenty of places. It also exists for many unfavored industries (such as my own) in North America.

      Every hot dog vendor is a classical liberal. Every corporate titan is a closet socialist.

      • 0 avatar
        Big Al from Oz

        @CrapBox
        Interesting you should make that statement, as I’ve heard a similar comment regarding the Chinese and Japanese.

        The comments went along the lines of, “A Japanese is a communist that lives in a capitalist country and a Chinese is a capitalist living in a communist country”.

      • 0 avatar
        wumpus

        “True capitalism” implies using someone else’s money, your hot dog vendor might be showing free enterprise instead. The US (and particually Delaware) incorporation laws make capitalism a strange exersize in irresponsibility*. I’ve also found that companies start to look (from the inside) like something right out of Dilbert if the owner doesn’t show up for work every day (even places where he might show up once a week).

        From the outside, it ussually takes the company to either go public or otherwise lose all the original owners. At that point management no longer has any responsibility to make reaq money, just make sure the quarters report “better than expected earnings” and the stock price is going well. A socialist oversite committee could often do no worse than the corporate board (not that they wouldn’t be chosen the same way, just cronys of those in power).

        I’ve been astonished at the local ABC stores in my old county (Montgomery County, Maryland). I assume that they are fairly good stores largely because every one of them is roughly a 10 minute drive from some city/county/state that has private liquor stores, but I am also suspicious that this deep blue county has true believe socialists running the stores (of course, they wouldn’t be allowed to run it if it didn’t have competition).

        * literaly. As long as you’re “to legit for RICO” you can’t be held responsible for your corporation’s actions.

    • 0 avatar
      VCplayer

      If government wants to participate in the marketplace, they are subject to market forces just like everyone else is. If no government was interested in bribing companies, things like this wouldn’t happen. As is though, if Canada doesn’t pony up, someone else will.

      Think of it this way: the NFL/NBA/MLB team in your city says they’re leaving unless the city builds them a new arena/stadium. The city can refuse, but a different city WILL build facilities for the team. It’s not “fair,” but if a city wants a pro sports team in town, the city is subject to market forces.

      Really, capitalism is less of a system of economics and more a of description of naturally occurring leverage in relationships.

      • 0 avatar
        Pch101

        Exactly. Automakers deliver something that governments want — lots of relatively high paying blue collar jobs — and they know it.

        The automakers have more leverage than most to get what they want, and they aren’t shy about using it. We’d be fools to expect them to not try.

  • avatar
    SCE to AUX

    What would Chrysler do if Canada said no? It would cost a lot more than $700 million to move the production elsewhere.

    • 0 avatar
      RobertRyan

      @SCE to AUX
      “What would Chrysler do if Canada said no? It would cost a lot more than $700 million to move the production elsewhere.”

      That is what Ford and GM are doing already moving to lower cost locations. Overall they are making a lot more money.

    • 0 avatar
      danio3834

      If the planned total investment is $2.3 billion, that’s basically enough to build a new plant or completely gut and retool any of their other under-utilized plants.

  • avatar
    Lou_BC

    @SCE to AUX – good point but as mentioned in the earlier thread on this topic, Fiat has plenty of underutilzed capacity.

  • avatar
    MoDo

    Chrysler likely wants to leave the van plant where it is, the exporting is going to be key for the next genration van. However, I don’t think they really want the LX plant there – but if it does count on an Alfa Romeo or two joining the foray (to be sent to Europe).

  • avatar
    Big Al from Oz

    I do think the Canadian’s are moving further away from the US regarding it’s economic ties. It is still tightly knitted, but the Canadian’s appear to be looking after their interests a little closer.

    The Big 2 and Fiat only look after themselves and have no allegiance to any country as is seen by the Australian experience.

    The Canadian’s are better off not giving the money to Sergio and see what the outcome is. The worst that can happen is $700 million dollars is saved.

    If Sergio was serious he would have stated I will move some production back to my under utilised European factories. But have a close look at the Industrial Relations in Italy. They are a mess in comparison to Canada.

    But I think Sergio will accept any handout, even a couple hundred million. He want’s money first and foremost and doesn’t care how it is derived.

  • avatar
    areader

    I live in a RED state and county, but the anti-welfare politypes are all over tax abatements for every damn thing some low-paying company wants to do. Seems only fair that the govt entity should receive an equity stake in exchange for their(our) ‘investment’.

  • avatar
    JD321

    Democracy = Stealing from people who don’t vote for you and handing the loot over to those who do.

  • avatar
    jimbob457

    Yawn.

  • avatar
    daver277

    If Chryco didn’t historically make inefficient B grade vehicles I wouldn’t mind subsidizing them so much but they just don’t make much that I can be proud to say it’s made in Canada.
    BTW, do they put the diesels in and Lancia badges on the Caravans before they ship them to Europe?

  • avatar
    Big Al from Oz

    Here are a couple of interesting links regarding issues that the Canadian’s and American’s should consider regarding protection and subsidisation.

    http://www.abc.net.au/news/2014-02-13/cowan-protectionism/5257426?section=business

    http://www.abc.net.au/news/2014-02-12/making-the-case-for-no-tarrifs-and-cheaper-cars/5256236?section=business


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