By on February 14, 2014

2013 Chrysler Town and Country

Fiat Chrysler Automobiles NV boss Sergio Marichonne, in talks with federal and provincial governments in Canada for loans to help prepare their factories in Windsor and Brampton, Ontario for new vehicle production, may come to a decision about moving forward with plans for where new minivans will be built by the end of March 2014.

Bloomberg reports that parent company Fiat is “not even close” to resolving those talks, with Marichonne hinting that he may take his business elsewhere, such as the United States or Mexico, if Canada won’t have them any longer:

“We’ve got to decide whether you want this or not. And if you do, I’ll be more than willing to stay. Global footprints are global footprints. I’m not using this as a threat, but there are some parts of the world that are desperately looking for capacity utilization, where infrastructure exists, is in place and is operational.”

The incentives sought for the new minivan production have been reported by Canadian newspaper Globe and Mail to be around $637 million, which would help Marichonne’s vision of an FCA capable of challenging larger automakers such as General Motors and Volkswagen.

Meanwhile, Canada is bolstering its Automotive Innovation Fund over the next two years by an additional $456 million (USD, or $500 million Canadian) over the $288 million (USD) already invested in six projects since 2008. The money is meant to attract all automakers in Canada beyond Chrysler, such as Ford, whose next-generation Edge will be built in Oakville, Ontario following a $640 million revamp by the automaker, and a $65 million investment by the Canadian government.

Though most of the Fiat-Chrysler merger has been worked out, Marichonne is doing all he can to remove distractions around the decision as to where new minivans will be constructed:

“We’re trying to remove all politics and noise around this issue. It’s a very simple investment call. We’re ready to go. We’re at the table. The car is ready. We’re ready to build minivans. Somewhere.”

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63 Comments on “Marichonne Still Seeking Location For New Minivans...”


  • avatar
    Kenmore

    A brown minivan disgorging larval savages.

    Thanks, I was feeling a bit too buoyant this morning.

  • avatar

    How bought Detroit?

    On a side note, I’m gonna see Robocop today even though I’m almost certain I’m gonna hate it.

    • 0 avatar
      danio3834

      Same here, but I’m ready to accept it for what it is.

    • 0 avatar
      Ion

      Detroit doesn’t have the money.

      • 0 avatar
        mu_redskin

        No, but the state of Michigan sure does. Almost all of these deals in any state are not done with local money but rather state money. It’s what gets Governors elected.

        • 0 avatar
          Ion

          True and they do have that empty Packard plant, though they probably wouldn’t be able to turn that around in an ideal timeframe.

          • 0 avatar
            bball40dtw

            Someone owns it now.

            I think the Packard Plant may be the last place on earth I would build an auto plant now. There is plenty of open land in Detroit, and surrounding areas, that would be a better fit. The cost to tear down Packard is goung to be at least $20 Million. There is nothing to scrap or salvage. The building is mostly concrete with rebar.

          • 0 avatar
            Pch101

            It’s cheaper and more practical to build new than it is to rehab gutted buildings with obsolete design standards and environmental issues.

          • 0 avatar
            mu_redskin

            once the new 200 starts down the line in a month or two, chrysler will have an empty assembly line waiting for product. The 200 plant had a new body shop and paint shop added, leaving the existing line in place.

          • 0 avatar
            bball40dtw

            Pch-

            Packard is obsolete and an enviromental disaster based on 1950s standards. I am down in that area often. It is in the worst neighborhood in America. I wish I was saying that for effect, but it is unfortunetly true.

          • 0 avatar
            Pch101

            I haven’t been to the Packard building, but from what I’ve seen of it, it’s probably best suited for hipster workspace and/or lofts (assuming that anyone would be willing to live and work there, and that there are subsidies to help to pay for the redevelopment.)

          • 0 avatar
            28-Cars-Later

            @bball

            The neighborhood the Packard plant is in, wouldn’t it just be easier to level most of it, relocate whomever is left, and build anew?

          • 0 avatar
            Pch101

            Demolition is very costly. Between proper disposal and the related cleanup costs, you could be talking about seven or eight figures for a large area.

          • 0 avatar
            28-Cars-Later

            Ah.

          • 0 avatar
            jhefner

            Demolition cost depends on the amount of recyclable materials the demolition company can turn around and sell as scrap; namely iron and steel. Old plants and factories that still have machinery inside and metal beams and roofs that can be sold for scrap will cost less to demolish than say a hotel or neighborhood that has little recyclable metal in it.

          • 0 avatar
            Pch101

            The building has been vacant for decades. I would bet that everything with value was stolen a long time ago.

            That leaves a bunch of lead-based paint, asbestos and whatever toxins were left by the manufacturing process. It isn’t possible to just knock it over and leave it in a dumpster for the weekly trash pickup; it all has to be demo’d properly, and its disposal supervised and documented, shipped to a landfill that will process that kind of waste. That could cost several dollars per square foot.

  • avatar
    OldandSlow

    Geez, FCA is only a month old and it needs a government hand out to move forward.

    Can someone enlighten me as to which US state would be willing to shell out 600 plus million bucks to FIAT in order to land a factory that assembles mini-vans?

    A note to Marchionne: I seriously doubt that the Mexicans would give FIAT $600,000,000 worth of incentives to build Caravans in Toluca, MX

    Also, FIAT does not have the option of assembling minivans for the North American market in Italy. It would be priced out of the market.

    • 0 avatar
      Ion

      Miss, Ala, Tenn, Texas, and that’s just to foreign makes. Granted no one make got 600,000,000 alone, atleast not without factoring in inflation.

    • 0 avatar
      geozinger

      Yes, almost any of the Southern states would be happy to give taxpayer assistance to an assembly plant on that scale. They’ll even outbid each other in a race to the bottom to get that prize…

      • 0 avatar
        28-Cars-Later

        …and spend $500 million they don’t have for 2,000 jobs…

        • 0 avatar
          mu_redskin

          It’s really not just about those initial 2000 jobs, It’s about all those peripheral supplier jobs that come with it. It’s 500 million well spent

          • 0 avatar
            Pch101

            It may or may not be well spent. But it undoubtedly leads to situations such as this because the automakers know that they can play off North Americans against each other. Every plant expansion can be turned into another episode of Let’s Make a Deal.

        • 0 avatar
          Lie2me

          Just building the plant supplies 1000s of jobs

          • 0 avatar
            28-Cars-Later

            I’m sure it would be difficult to get one but if I were making the call I’d want a reliable estimate of how many peripheral jobs would be involved.

          • 0 avatar
            Lie2me

            The MB plant in Vance, Al which employs 3000 when it was built in 1997 supplied 8000 construction jobs just to build it

          • 0 avatar
            28-Cars-Later

            Good data, although construction jobs are of course temporary.

        • 0 avatar

          What does it cost them to NOT make the investment?

          • 0 avatar
            28-Cars-Later

            Great question. If say Alabama coughs up $500 million it doesn’t have to employ 2000 people directly and up to 10,000 more in the state, and the ROI through increased revenue takes 100+ years to realize, I’d say save your money and find something cheaper for the proles to do. If in the same scenario the amount is less and the ROI is higher/more realistic, then have at it. The problem is these high priced packages are really corporate welfare and further demonstrate how worthless our currency really is becoming through inflation.

            AL to TN: Oh you only spent $577 million to build Chattanooga in 09/10? We had to spend $700 million in 14/15 to build the Chrysler plant.
            TN: We sure got a deal, I hear GA is spending $900 million on the new BMW plant in 16 or 17.

          • 0 avatar
            Lie2me

            You got to remember that these auto-plants attract more automobile manufacturing. One of the reasons Kia choose West Point Ga for it’s plant was the success of nearby Mercedes

          • 0 avatar
            28-Cars-Later

            Also a good point.

          • 0 avatar
            redmondjp

            Even more significant are the supplier facilities that will inevitably be located close to the plant.

            Interior systems providers, for example, that produce ‘just-in-time’ line-sequenced dashboard assemblies and interior components.

            The multiplier effect is strong and shouldn’t be overlooked.

          • 0 avatar
            krhodes1

            And those good wages that get paid in and around the plant get spent in the local area. This is why it really doesn’t matter not a bit what company owns it or where they are headquartered, only a tiny fraction of the spend is profit that is sent wherever.

            Any company that does NOT try to get maximum local assistance to build anything in this era is utterly nuts. If they are willing to spend it, you are not doing your due diligence if you don’t try to get the money, regardless of how profitable you are Companies are not charities.

        • 0 avatar
          Hillman

          It depends on how they structure the incentives. A lot of times the “redevelopment” grants are just property tax breaks. So, instead of getting a property tax on a giant field or abandoned factory the city gets a fully operational building with plenty of jobs. The localities will come out ahead because they will realize the gains through increased property taxes for the workers homes as well as other taxes such as meals taxes that the workers pay. Without the factory those taxes won’t get paid anyway so it really does not cost them anything other then the lost revenue of an abandoned property.

    • 0 avatar
      mcs

      >> A note to Marchionne: I seriously doubt that the Mexicans would give FIAT $600,000,000 worth of incentives to build Caravans in Toluca, MX

      They wouldn’t pay them directly, but it probably wouldn’t take long to save $600 million because of the wage differential. What’s the difference – is it something like $30 per hour?

      • 0 avatar
        Lorenzo

        The wage differential can’t be that high. The average assembler doesn’t make $30/hr. in the Southern plants, and there’s the lower UAW wages in older plants. The wage savings is there, but from what people have told me about maquiladora plants in Tijuana, the Mexicans do quality work if you have extra supervision, and that’s an added expense.

  • avatar
    alsorl

    Marichonne should also think about building a mini van that gets an avg of 30mpg or more. This would open up the van to so many buyers.

    • 0 avatar
      Kenmore

      Amen. Shrink down the GC by 20% and put a 4-cyl. in it. Keep the Stow&Go seats in passenger versions. Undercut the Transit Connect and NV200 by a few thousand per unit. Sell gobs to pretty much the same people who now buy the AVP big ones used.

      Leave the T&C as is for thems as wants the size and don’t care about MPG.

      • 0 avatar
        Lie2me

        From what I’ve seen there’s going to be a lot of tall boxy little things coming out of Fiat-Chrysler over the next few years. Think of the Fiat 500 as Silly Putty stretched every way you can think of… Like the “K” car

        • 0 avatar
          Kenmore

          Hope you’re right. And I hope Marchionne truly understands what decrepit boomers need for a means of conveyance. That market is his for the taking. Only the Soul presently exists for it below the 30K level.

          • 0 avatar
            Lie2me

            Crossovers are the boomer’s panther, they understand this. They also understand that like our forefathers the older we get the cheaper we get. Panthers were relatively cheap at the end

            A good example of a future Feep (Fiat-Jeep)

            http://img.gawkerassets.com/img/18rbb27akvgiijpg/ku-xlarge.jpg

          • 0 avatar
            Kenmore

            Truth. More and more I hear “But you can easily afford that!” from the young’uns.

            They just don’t get *why* I’ve ended up this way.

            PS: Love that Feep! Slap some Blizzaks on it and I’d run some errands today!

          • 0 avatar
            Lorenzo

            We decrepit boomers resent that remark. As Lie2me mentions, we’re kind of cheap, so the market isn’t there for high margin, blinged out vehicles. Actually, the best model is the original short bed K-car mini, which was shorter than the current Corolla. If FCA can build something like that on a stretched, widened Fiat 500 chassis, they’ll have a winner, if it’s at the right price.

    • 0 avatar
      geozinger

      Witness the Fiat 500L. It’s roughly the same size as the original T115 minivans, just with hinged doors instead of sliding doors.

      It probably wouldn’t take long for FCA to adapt sliders to that chassis, change up the sheetmetal a bit… Et voila! New small minivan…

      • 0 avatar
        Kenmore

        Make the greenhouse tall and give me at least 8″ of ground clearance. I’ll stop by for a test drive.

        Oh, and forest green as a color choice would be just tits, too. As a Slavic boy, tits always trump.

        • 0 avatar
          alsorl

          My wife and I test drove 6 different models. And her favorite was the 500L. Its a great size for someone under 5’5″ and has an open greenhouse. So many of the new cars have these tiny slit of windows. The new Soul, Chevrolet Equinox, and Land Rover s. I know thats a wide range of autos. Just giving an example. I’m not sure on the quality yet of Fiat. So we did not get the Fiat. My neighbor smashed the front of her ABarth, it looked bad. But was still drivable to a point. Yet the insurance company totalled it, so they say.

    • 0 avatar
      danio3834

      There is a hybrid van in the works.

  • avatar
    honda_lawn_art

    Does the economy of Ontario even stand to gain $600,000,000 over the duration of the proposed incentives? That’s a lot a Loonies.
    At that point it’s probably more profitable to pay Canadian auto workers to stand around and play table tennis.

  • avatar
    kitzler

    Marichone, Maricon! OLa, this guy has “balls”, good luck Mr. Marchione, just don’t hold your breath! You are no Goshn! Like in Carlos.

    • 0 avatar

      Actually, Marchionne has surpassed Gohsn. In this case, Marchionne is holding all the cards.

      I wish some of the participants from the “transparency” discussion would show up here to tell both sides they should provide the best deal they are prepared to take up front. This is a business discussion of the highest order, certainly higher than negotiating a car deal. But there is some art to it. Will one side win while the other side loses? Will they find common ground and reach a “win/win” deal? How will the deal impact residents around where the plant is established? Is there a “greater good” component that should be considered? Or is business just business? What would you think if you owned stock in Chrysler/FIAT? Would you make a decision for the “greater good” and take a chance on being under priced by your competitors, who might have taken a more business like approach to the issue?

      • 0 avatar
        Pch101

        If the governments behaved like car salesmen, then they would yell and scold during the negotiations, then type up a contract with numbers that don’t match what was negotiated.

        On the other hand, the coffee served at both places would probably be equally bad.

        • 0 avatar
          Lorenzo

          Actually, I’ve gotten some pretty good dealership coffee, but from a fresh pot. Dealers would do well to drop the pot warmers that cook the coffee and use insulated carafe. That coffee can be rewarmed – once – without burning it. It’s sad to think customers judge a dealer by the coffee, but they do.

  • avatar
    vcficus

    Actually, as even TTAC has chronicled the Chrysler twins STILL outsell their competition and that plant runs flat out, three shifts, 6 days a week most weeks. 345,000 minivans in 2013 is worth leveraging a half billion for… especially when you’re cash poor right now due to Europe.

    What I DON’T see happening is any other states in the US or Mexico coughing up that kind of incentive… so Canada may have the upper hand in the long run. If they say no and Sergio can only get $250 million and has to build a whole new plant somewhere Chrysler can’t get it up and running in time.

    Chrysler cannot use any current car factories to build minivans… they couldn’t build the PT Cruiser in Belvidere because of clearance issues, the only plants they could build in would be the RAM plants and those are fully booked.

    Also, I don’t believe they could open up either of the old St. Louis plants without at least half a billion in new investement… all the equipment is stripped out.

    Sergio isn’t stupid, but this isn’t an automatic deal either.

    • 0 avatar
      Pch101

      A lot of that goes to rental — last I checked, Honda is consistently the retail leader in the segment.

      If Marchionne’s plan is to move the minivans up the pricing ladder, then volumes could decrease. His general plan is to position the Chrysler brand as near-luxury, but I don’t know how that could affect this.

      In other words, he may be planning for reduced production levels, which could play a role in his decision making.

  • avatar

    While Marchionne may threaten to use some of Fiat’s excess capacity, the cost to convert one of those plants in Europe to minivan assembly for the North American market will not be trivial. It’s an empty threat. The Canadian and Ontario governments will probably kick in a little more money and the Windsor plant will keep making T&Cs.

    • 0 avatar
      mu_redskin

      hey Ronnie – your in Detroit. Ask around how much it would take to convert the current Sterling Heights assembly line to build minivans once the new 200 goes into production. If some of the post on Allpar is correct, then all that is shared between the new body shop/paint shop line and the old assembly line is the final assembly line – which they could decide to duplicate as well. Windsor is not that far away, so most of the suppliers are already close.

  • avatar
    Gardiner Westbound

    Marchionne is a brilliant businessman. He got Chrysler largely for free and will soon get a very large part of his Canadian plant refurbishment for free. If Canada/Ontario doesn’t promptly pony up the cash there are several other jurisdictions lined up to give it to him. The extortion will never stop. He’ll be back in a couple of years for more.

    Ontario Detroit Three plants are straight-jacketed by union rules and wages. With no prospect of relief from politicians courting the unions they are fleeing to Worker Choice jurisdictions. GM has closed several facilities, the Oshawa GM plant is a shadow of its former greatness. Ford has closed several factories including the St. Thomas plant. That’s tens of thousands of jobs in the toilet.

  • avatar
    Freddie

    Ideally, states, provinces and localities would attract businesses be keeping taxes and regulations reasonable for all businesses rather than making special deals with a few. But when the “sticker price” for doing business is so high, large companies with the leverage of bringing in lots of jobs are going to want to bargain.

  • avatar
    NeilM

    Note to author: One way to forfeit all credibility is to misspell the name of the person you’re writing about.

  • avatar
    el scotto

    With every FCA and Sergio story why don’t we get to know what they’re thinking in Turin?


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