By on February 19, 2014


FCA CEO Sergio Marchionne took to The Globe and Mail‘s editorial pages to make his case for government investment in Chrysler’s assembly plants in Canada. Marchionne is seeking government funds to upgrade the Brampton plant (which builds Chrysler’s rear-drive cars) and the Windsor plant (which builds minivans, and would be upgraded as a flexible plant) as part of a $3.6 billion investment.

For readers of TTACthe facts and figures will be familiar. Marchionne correctly asserts that of the $42 billion in recent automotive investment in the NAFTA zone over the past 5 years, just $2.4 billion has come to Canada. According to Marchionne, this new Chrysler investment would be larger than anything Canada has seen in recent years, securing thousands of jobs and the future of both plants for years to come. All it will cost is a reported $700 million.

Marchionne is correct in asserting that “every global automotive jurisdiction around the world” is giving significant handouts to auto makers, Canada is a small player globally, and cannot afford to keep pace with the United States and Mexico, which foot as much as 50 percent of the bill for new auto plants.

At one time, building cars in Canada made sense. Legacy plants left from the pre-Auto Pact era cranked out cars in an era of Detroit 3 dominance and a relatively low Canadian dollar. Health care costs, long a bugbear of the auto makers and the UAW, were covered by the government, eliminating a major financial sore point.

Now, times have changed. NAFTA has superseded the Auto Pact, and that means auto makers can set up shop in Mexico, where workers are content to build cars for mere dollars per hour, or in the South, at $14-$16 per hour, versus the $32 per hour figure that some estimate it costs in Canada. Marchionne could even utilize capacity in Europe, thanks to a Canada-EU free trade deal and minimal tariffs in the United States, to import Chrysler vehicles if he so chose to, though that’s a far-out scenario.

The question is whether Canada can afford to play the subsidy game, with its ever-increasing stakes. The prevailing view among many pundits is a firm “no”. The $700-million figure seems outsized in relation to the 10,000 or so jobs it might save in Ontario, and there is a strong sentiment against “corporate welfare” for an industry that constantly has its hand out looking for assistance.

There is simply no assurance that upon receipt of government funds, Chrysler or any other auto maker will make a long-term commitment to Canada, rather than simply hit up the government in a few years time looking for more money. And the fact that the CAW failed to secure any product investment during the last round of contract negotiations (unlike Ford and GM) only serves to leave Marchionne in a stronger position to pick up and leave when the contract expires in 2016 (coincidentally, the same time as the new minivans are set to debut).

But one proposal, being floated by media and finance types (as well as a couple of industry figures, off the record) and others I have spoken to in the past, involves receiving equity in an auto maker in exchange for government funding – an “investment” in the truest sense. From a free market standpoint, I find the notion of “Government Motors” rather troublesome. But we live in the real world, where ideology must take a back seat to what is happening on the ground right now.

And in this world, Canada cannot compete with Mexico and other low-cost jurisdictions, let alone the United States. A loan, tax credits or other forms of “investment” provide minimal upside with plenty of downside risk. Canada has no leverage, but is effectively funding FCA as an auto maker.

At least with some equity (such as preferred stock, like the bailout-era TARP program), the government can benefit from the upside in share price and have a seat on the board of directors. If FCA threatened to leave Canada, then the government could do something like threaten to sell their stake to a Carl Ichan or a Bill Ackman, the kind of activist investor that no company would actively court. Again, such a scenario is hypothetical, but it demonstrates the leverage that equity gives.

Viewed through that lens, the alternatives – continuing to act as an ATM for the auto industry, or telling FCA to get lost and risk losing a giant chunk of Canda’s auto industry – somehow seem less palatable.


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47 Comments on “Editorial: A Radical Solution To Canada’s Auto Industry Investment Problem...”

  • avatar
    doctor olds

    Canada’s Ontario is a player in contention with US states, and currently suffers from higher labor costs in the never ending fight for more production.

  • avatar

    1.The Government needs to focus on road, schools, fire and police.
    2.FCA needs to focus on building cars.

    The potential upside on the stock does not outweigh the potential downside on the stock – not to mention the hugely and fundamentally different fiduciary responsibilities that would be introduced at board meetings.

    The Bill Ackerman example is a great reason to not do this – they need to be focused on Point #1, if they don’t want to be ATM’s anymore, then don’t be. It’s as simple as that.

    • 0 avatar

      It’s not as simple as that. What does Ontario produce today? We are becoming, already area, a province of government workers. We’re losing the tech companies, the ring-of-fire isn’t happening, agriculture spits back the subsidies it gets, so no net benefit.

      Among my wife, myself, and closest 8 friends: 3 are teachers, 3 work in healthcare, two work in government, I’m private sector but my projects are 100% government funded, and one person (out of 10) is legitimate private sector. Does this work for the long term?

      On the surface spending 700 million to hold on to manufacturing jobs seems wrong to me too. But I’m not sure it’s really better for government to re-allocate to more roads, schools, and healthcare.

      • 0 avatar

        ^ This ^

        The same thing is happening down here in the states and it scares the bejeebers out of me (esp. for my kids) – you can pick any of hundreds of former factory towns and see what catetories the current largest employers are in, and here’s the list in almost every case (the order may change slightly):

        1. Government
        2. Healthcare
        3. Education

        We need all of these things, but how is this AT ALL sustainable in the long term??? Manufacturing, or any other value-added endeavor, was the profit machine that enabled all of these other entities to exist.

        My wife is a public school teacher and I now work for the gov’t (after being in manufacturing for 16 years, getting laid off multiple times, and not being able to find work during the last downturn). So thank you everybody else for supporting our family!

        • 0 avatar

          I agree with both of you.

        • 0 avatar

          That’s the fundamental problem with arguments about ‘Big Gubmint’. In the past (tribal era, through kingdoms, monarchies, and up t0 the early American Republic, it took almost the entire output of the population to feed/clothe/protect/shelter/entertain the population. The ‘bureaucracy’ (whether it be kings, aristocrats, priests, presidents, or plutocrats) could only skim a very small percentage of the population’s working effort for itself and its maintainence.

          Than the industrial revolution hit in the 1700/1800s, making it possible for a much smaller percentage of the population’s total effort to meet those needs (food/clothing/shelter/protection/entertainment). Most of that ‘excess’ labor went to war, went to colonize the ‘New’ World, or went into manufacturing.

          Fast forward to the 21st century. Thanks to computerization of everything, we’re entering another seismic shift. What used to take 100 men to build now takes 5 programmers, 5 robotics techs/machinists, and a delivery guy. We haven’t figured out what to do with all this ‘excess’ labor yet. War isn’t a viable option anymore thanks to nukes, and we gave up on colonizing new worlds when Nixon started shutting down NASA in the 70’s (more or less completed by his spiritual heir Obama in killing the Mars mission).

          Sorry for the long diatribe. What I’m getting at is, in the new digital economy, manufacturing simply won’t support the number of people it used to, but will support the ‘whole’ of the population easily. We just have to figure out what to do with the excess people.

          Besides soylent green, that stuff tastes terrible.

          • 0 avatar

            So why are we all still working 40-hour weeks (or more), like our grandfathers, when productivity has increased so we should be able to enjoy the same standard of living on a ONE-day work-week?

            Why do our wives work 40-hour weeks too, when many of our mothers didn’t have to — how did so many families get by on ONE income, where now we need two?

            Here’s one guy who thinks he knows why: .

            He certainly doesn’t seem to be obviously wrong.

  • avatar

    Large corporations in general, and automakers in particular, will ask for subsidies because they can. Jurisdictions compete against each other for the benefits of the business, and they know it. These companies would be foolish not to ask, particularly when they are well aware that they can get it.

    I frankly doubt that FCA would want to give you or any other government equity. FCA just acquired the VEBA’s Chrysler shares so that it could put them (via the newly created FCA) on a US exchange and monetize that into gains that will bolster their value and borrowing power. These companies will only give you equity when they’re desperate.

    At this point, you just need to accept the subsidies as a cost of doing business, and decide on a case-by-case basis whether they’re worth it. (The subsidies provided to US sports teams are almost always a boondoggle that cities would be wise to reject.)

    I haven’t crunched the numbers on this, but Marchionne has shown himself in the past as being one to overshoot. If the Canadians are smart, then they’ll drive a hard bargain with him, but give him some of what he’s asking for.

  • avatar

    Or, take the damn money and use it to train every auto worker to hack FCA and cause mayhem in their servers. Seriously, kick them the hell out. Kick NAFTA to the curb. Tariff every low cost auto based on prevailing Ontario and/or Detroit wages. Stop this foolish scenario with its race to the bottom for the working class. Destroy the fiction that the UAW is the cause of every automaker’s ills. The Germans have higher wages and export more dollar value than China. It can be done. First, do not buy anything made outside the U.S. or Canada. Next, unionize every workplace extant. Forget the bullshit minimum wage increase. The American worker is the most productive in the world. With 300,000,000 consumers to back them up. The only language the greedheads understand is money. Use your collective buying power as a cudgel. Get everyone to stay away from WalMart for 3 days. Next, don’t buy any cars for a week. If only the low wage earners could unify, they could bring every industry to the table. In the late 1800’s, through the early 1900’s, people were dying for your forty hour week, for safe working conditions and a decent wage. Want to see a Senator grovel? Shout union in the Tennessee capitol. Want something from the American oligarch’s? Unify and use your collective power. Individuals are doomed. Both parties of American politics have one ideology – money. Our grandparents who fought in two world wars would be ashamed that we’ve allowed all their progress to be undermined and eliminated. And compromised by 100 channels and complacent ignorance. We cannot pay for schools, but we arm the police with armored cars and M-16’s. We cannot pay for drug treatment, but have 2,000,000 people – most black or brown – in prison. Hunter Thompson was right – we’re a culture of fear. My generation -the Boomers – will be looked on by history as one that came in with great promise and went out with our tails between our legs.

    • 0 avatar


    • 0 avatar

      It is hilarious that your rant is full of the same quality of thought that the baby boomers used to get us where we are. The idiot campus radicals won. All they can do now is divide up the spoils to reward their fellow monsters and punish the people that understood what they don’t, which is how to create wealth.

    • 0 avatar

      @olddavid – you raise some intersting points….. but….

      I agree that the UAW/CAW(Unifor) are not the sole cause of the collapse of the auto industry but are one of the leading contributory causes.
      Unions were great at making workplaces safe but have become a parasite.
      When an organism is strong and healthy, it can easily survive the attachment of multiple parasites. That same organism will die or become deathly ill when hardship is thrust upon it.

      Kicking NAFTA to the curb, building walls to keep out cheap imports will shore up an unhealthy organism just like a blood transfusion will shore up a patient. The organism will not regain health if one fixates on “supportive” care (read bailouts, tariffs, subsidies).

      I do agree that one can chose to shop where it has the most benefit to one’s country but are you willing to pay 30 dollars for a homegrown shirt as opposed to the 8 dollar wallymart special?

      Your approach will lower the standard of living you chose to protect because your purhcasing power will drop even further.

      Those who believe in “free” markets should realize that just like in “nature” weak organizms are predated by stronger ones. Parasites speed up the process. Scavengers come in and pick the bones clean.

      You can’t pick and chose who wins and who loses if one wants a sell regulated market.

      I agree that spending is misplaced. I don’t blame governments for supplying Law Enforcement with the items you mention. What kind of firepower due the badboy’s have?

      One would be better served by pulling the military out of every banana republic and Jihadist centric country on the planet and put that money to education, R&D and every other item that will improve a country.

      • 0 avatar

        “are you willing to pay 30 dollars for a homegrown shirt as opposed to the 8 dollar wallymart special?”

        There’s an old expression that goes “I’m too poor to afford cheap tools”. Let me give you a small, personal example. Several years ago I was split between 2 home bases and I needed a can opener. I went to the store and looked at the selection. There was a 99¢ option from China and a $2.99 option from the US. I cheaped out and bought the 99¢ one. It broke within a year of light use. I went back and bought the $2.99 one and I’ve been using it for about 7 years. Since then I’ve stopped looking at price as much as I look at quality. I won’t buy something out of jingo-istic patriotism but I find that the better quality item is likely made closer to home since the local producer can’t compete on price.

        • 0 avatar

          Tools are one thing, but cheap clothing, etc, quite another.

          I share with you the penchant for quality tools, but clothing? Tools are used to earn more money. Everything else is expendable.

          Maybe it is because I have to spend my money carefully and value what money can do if spent wisely, but I usually look for the best deal for the money. Even if it is made in China, Mexico or the Honduras.

          That’s why I shop at Costco, Sam’s and other Huge Box stores. I may spent more initially, but I buy in the greater quantity. Shirts too.

        • 0 avatar

          @ClutchCarGo – it appears that you missed the point of my metaphor.

          Are you willing to send considerably more for a homegrown product?

          That will decrease your standard of living because you will have less money to spend on other items.

          • 0 avatar

            Lou – I got your point, and yes, I’ll spend more for a homegrown if it’s higher quality, and I’ve found that higher quality is often locally produced since homegrown can’t compete on price. Admittedly, this often doesn’t apply to things like cars (at least the ones available in NA), and it’s pretty tough to find clothing made locally. But if buying higher quality lets me replace things less often, in the long run I’ll have more money for other things, not less.

            HDC – I’ve actively sought to buy better quality goods, including consumables like clothing, shoes, etc so that I’m replacing them less often. I spend a bit more now to save later, including the time required to replace those things. It’s tough to find some of these things made in the US without going to high-end luxury goods but when I do find them the US products are usually better quality.

          • 0 avatar

            ClutchCarGo, I, too, am selective about clothing because I actually perform manual labor in them when upgrading or repairing the rental properties belonging to my in-laws.

            I use steel-toed boots from Big 5 or Wal-Mart, coveralls from Penney’s and a big floppy desert-hat from an on-line retailer who specializes in Sunhats for boating. My underwear is made in Honduras and the Dominican Republic.

            My pin-stripe suits I bought at Men’s Wear House in El Paso, TX but my shirts and ties come from Penney’s along with my dress socks, slacks and Blazers. Leisure socks come from Wal-Mart.

            My three sets of different-color EEE Wingtips are made in the US of A by UFCW, a company no longer in existence, but they should last me the rest of my lifetime if periodically resoled.

            My tennies and sandals I pick up wherever I see something that appeals to me and they are usually made in Mexico, South America or China.

            My point here is, I buy what I need, when I need it, if I see something I like. To me it doesn’t make sense to go shopping for something Made in America in order to pay more for something that may or may not give you longer wear.

            Now, tools? Yeah, that’s an entirely different animal because tools are an extension of myself and make my life easier doing actual work, if they are quality tools.

            I try to get out on Saturday morning’s and hit up various garage sales and estate sales.

            I picked up some really quality stuff for dirt cheap, and still use most of it today. I am going to pass it all along to anyone within the family that wants them.

            Among my precious finds are an Accubanker D64 that detects phony money, a variety of Invacare Platinum 5 series Oxygen Concentrators to help maintain my in-laws’ breathing aparatii, and a host of hand and power tools.

            But the crowning achievement of all this weekend garagesale-ing has got to be the three complete ShopSmiths I picked up for dirt cheap, along with many prized handguns, rifles, shotguns, reloading gear and tons of brass.

            But, hey, do what works best for you. Usually, one job with my air-powered paint-sprayer, or a re-roofing job involving hot tar, spells the abrupt end for my work clothes of that day.

  • avatar

    It’s odd that on one hand you would be critical of Sergio for not giving into the unions on product investment guarantees while, on the other, suggest that the government be given shares in order to be able provide them to unwelcome investors, such as, Carl Ichan or Bill Ackman. What would be the benefit to that?

    He’s asking for what is considered the norm these days. In the end, everybody wins. However, with no investment, no one wins.

    • 0 avatar

      What I said was that by not securing any product guarantees, the CAW was left in a weaker position, unlike Ford and GM, which did get some. And selling the shares to someone like Ichan is a hypothetical, not a suggested course of action.

      • 0 avatar

        You highlighted the union comment in red and mentioned the selling of the shares as a deterrent to a company that would indicate it would not keep its original commitment. If the company is making a profit and the employees are earning a good wage, why would they leave?

        The reason other regions would compete for the investment is because it has been proven, it’s better to have the jobs than not. A perfect example is the current circumstance where the US and Canadian governments stepped in to save the auto industry. It’s generally accepted that it was a good move. Same thing here.

        • 0 avatar

          It’s red because it’s a hyperlink, not any emphasis added.

          • 0 avatar

            Hey Derek, I hadn’t noticed that the red emphasis was a link to another article. All the same, I doubt that Sergio would find government ownership acceptable considering that they did all they could to get the government out of their boardroom by paying back the loans as quickly as possible. The same was true for buying out VEBA.

            As long as there are other regions willing to invest in new or expanding industry, this issue will always exist. He’s stated that he would prefer to stay, however, he must always be mindful of cost and ensure he remains competitive. This should also be true of the regions where the costs are incurred. This is where the local governments have to step up and ensure a level playing field.

  • avatar

    If the Canadian government gives up on Chrysler, where will it stand its ground when it comes to industry’s abandonment of the country? When will it be too late? Tar sands won’t last forever. Tim Hortons can’t employ the whole country. If you can’t just let the industry jump ship, and you don’t want to give the companies money with no strings attached, strategic investment (like in the bailout) might be the best of two evils.

  • avatar

    I agree that some sort of guarantee by FCA is required. If not equity in the corp, at least equity in the plant and tooling to prevent FCA from moving production at their whim. The only other way to hold FCA to task would be to structure the $700M as tax credits that only become available over time, but I don’t think that FCA can or would accept that.

  • avatar

    As an Ontarian, I think that it’s important to get all the cards on the table before making an educated and non-partisan decision about how to proceed.

    As a result of Straussian economic policies enacted by our federal government, Ontario’s manufacturing sector is extremely vulnerable — the high dollar has benefitted Alberta’s resource-extraction industry tremendously, but it has also made it extremely expensive to produce goods here. While I understand and (barely) tolerate the reactionary “keep government out of my business” mentality, it doesn’t work unless you’re willing to trade your standard of living for your political ideology. Which I’m not.

    We also need to keep in mind that government policy got Ontario into this mess in the first place. We may need to swallow this bitter pill in order to keep people at work.

    Lastly, for what little it’s worth, the last two vehicles I bought were made in Ontario – Brampton and Windsor respectively. This was not coincidental. If ChryCo moves, they lose my business.

    • 0 avatar

      I have to agree that it is a tough choice.

      Do we let ideology dictate our answer to FCA’s request?

      I personally am not a fan of government intervention but government meddling supported by lobby groups have caused many of the problems we currently see. It has become (as many others have pointed out) the way big companies do business.

      I suspect that Ontario and Ottawa will cave in and provide cash. In what form that is to be seen.
      Guarantees of some kind are required so government can see a return on investment. Equity stake is an interesting option but FCA won’t go for it.

  • avatar
    heavy handle

    700 million sounds like a lot, but it’s roughly one half of one percent of the yearly Provincial budget. It’s a rounding error on the Federal budget.
    If those jobs go, they are never coming back.

    Let’s stop pretending that everything will be perfect if only we stop investing in our future. That’s the exact opposite of what will happen.

    • 0 avatar

      Investment is necessary, but if govt makes the investment why does FCA get to keep the profits? Yes, yes, jobs, taxes, yada yada, but that’s a small return on $700M.

  • avatar
    Gardiner Westbound

    Mr. Kreindler has overlooked a major potential equity partner, Unifor (formerly CAW). The prime beneficiary should fairly share the cost of yet another automaker subsidy with the taxpayers. It should be conditional on UAW competitive wages.

  • avatar
    Big Al from Oz

    So, you support taxpayer dollars buying into failing businesses?

    Do you also support the breakdown of the uncompetitive parts of an industry and selling them off?

    The reality is, the Canadians’ must look at how other countries have fared by having too much involvement with industry financially.

    What you want will make it all too much easier for companies like Fiat to say, ‘well, we need more money’ and the Canadian taxpayer will fork over more because of the vested interest the government has given them in a failing business.

    This will also lead to the government protecting itself/taxpayer against loss. More tariffs and protectionism will be the outcome.

    This is a very poor idea.

  • avatar

    Does anyone here know when it became ‘necessary’ for governments to bribe companies to manufacture products in a given jurisdiction? In the US it’s become a regular practice for every little crap company to extort money from the city/county/state when they install a new machine or replace a roof in order to ‘create/preserve’ jobs. Did this practice come after free trade or was it common before? One incentive for companies to manufacture in the US, for example, was to avoid tariffs. That seemed to work in the case of Honda and Toyota. Of course that restricted trade. But it sure as hell got a lot of good paying car making jobs here.

    Also, it would be very interesting to see a full accounting of how much this adds up to for all corporations. In Indiana where I live, tax abatements are a favorite. So local schools are starved, road maintenance is reduced and communities are stressed.

    Now the CBO tells us that raising the minimum wage would kill jobs. A few months ago, Boehner was claiming that we needed to cut taxes on businesses so they’d have more money to hire workers. This story would hold water if hiring was done as an act of charity of employers, but I understood it was a business decision based on need of more service or production. It seems to me that hiring is done in the same way. If demand exists and it’s profitable for a company to hire at a given wage, the hiring is done. Otherwise it’s not. The common thread here is that our economy can’t succeed unless companies are subsidized and workers squeezed at every step. The ‘associates’ at the likes of Dollar General are knocking down all of minimum wage plus a pittance while the worthy CEO takes in $15 million or so. Same for his buddies at Dollar Tree and Family Dollar. Even the ‘software engineers’ who used to be well paid are somehow now not worth it anymore. But of course our pathetic school system can’t crank out people who can learn this stuff so we need more and more H1B visas to import people with the necessary smarts who just happen to be locked into a particular employer once they’re here. Oh, and while we’re at it, kill off the teacher unions who are obviously responsible for this national lack of brains. Seems the only way to make any damn money is to be a CEO or financial engineer.

    It is obvious that we’re going down the damn tubes. We had a couple of great Democratic presidents to help this along. Slick Willie was a new kind of Democrat who sold the free trade bill of goods which seems to have helped the predicted race to the bottom for wages and the current incumbent supports the much lower tax rates for dividends and cap gains compared to wages. There’s no reason in hell why we should have different tax rates for these types of income. People work to make money. People invest to make money. We haven’t had a true Democrat since Truman.

    • 0 avatar

      “Even the ‘software engineers’ who used to be well paid are somehow now not worth it anymore. But our pathetic school system can’t crank out people who can learn this stuff so we need more and more H1B visas to import people with the necessary smarts who just happen to be locked into a particular employer once they’re here”

      We do have people with the smarts and training to do this work, but Microsoft, et al, prefer to import cheap braceros to do the coding, people who can easily be dumped if they start to make waves at work.

  • avatar

    Speaking of Government Motors, it doesn’t get mentioned much but while the U.S. Treasury has sold off all of its shares in GM, the Canadian and Ontario governments still own over 100 million shares in General Motors.

  • avatar

    @Ronnie Schreiber – Canada has sold GM shares and plan on having them all gone by the end of 2014. They’ve already lost a billion on what was sold.

    • 0 avatar

      Lou, but that was a bad, wasted-money investment at inception. A lost cause from the start.

      OTOH, what Sergio is proposing here is to have the Canadian governments, down to the local level, indirectly invest in Fiatsler by creating a business-friendly environment that allows Canadians to enjoy the pleasure of Fiatsler’s company.

      I think it is a smooth move on Sergio’s part and certainly a thousand times better than the ill-advised and misbegotten investment in dead automakers of 2009.

  • avatar
    juicy sushi

    A good article, but I am not sure if the idea is viable. I think the broader question is how to replace large scale manufacturing as this form of industrialization flees to the lowest-cost jurisdiction possible. The emergence of 3d printing and decentralized manufacturing of basic consumer goods will change a lot of societal organization. Also, the notion of a guaranteed basic income would change things. That being said, late capitalism faces a legitimacy crisis in that it does not provide a path to prosperity for the majority of society. If an economic system fails to provide an incentive to participate for most people, they will change the system.

    • 0 avatar
      Felix Hoenikker

      The big question is how our version of capitalism is going to provide sufficient prosperity to the majority of the citizens to keep them from voting themselves raises through social welfare.
      I don’t see the current corporate trajectory doing this.

      • 0 avatar
        juicy sushi

        That’s been done for the last 40 years at least. Every “tax cut” voted for without commersurate spending cuts is the same thing, just favouring what had been the “middle class.”

        I foresee something rather more violent as states respond to demands of elites by implementing policies which specifically hurt 95% of a society. There is no incentive to support a system which specifically refuses to include you. At that point, the system is no longer legitimate, and when enough of a society feel that way, the system will be changed. By violence if necessary.

        • 0 avatar

          I don’t know about in Canada, but in the US, the tax cuts have not favored the middle class. They have favored the very wealthy, the “one percenters”. The wealth has not trickled down like was promised. In fact, in the great recession, thanks largely to first a home prices ran up fueled by a variety of bad credit practices, then the bubble burst, and a big chunk of the American populace found that their entire net worth was wiped out. The bubble didn’t wipe out the net worth of nearly as many wealthy folks. This evaporation of net worth was not caused by too much interference in the market, it was caused by not enough regulation of unfettered greed and dishonesty. You can say the homeowners were stupid for dropping so much dough on their houses, but they weren’t paid to be geniuses unlike the Wall Street banksters.

          • 0 avatar
            juicy sushi

            But the tax cuts over the last 40 years were enthusiastically voted for by the middle class in America. Everytime they voted for a Republican administration that didn’t have large, documented spending cuts to go along with their tax ideas, they essentially voted for a form of income support/economic welfare. And after almost a half century of it, you guys are now facing some tough choices.

            The reality is that the baby boomer and “greatest generations” rode a massive era of growth and globalization to great prosperity, but the world they invented is slowly eating itself, and their children. Their vision of society, including the marketing, movies and magazines we all still love is simply not sustainable going forward. We’re going to have to invent a new future for ourselves that works with the situation we actually face. And it’s not going to be the system our parents, and the winners of their world, knew and liked.

  • avatar

    The issue is loans, grants, subsidies are only the beginning of demands for Government support.
    USA TARP made $79.7B available to GM and Chrysler. GM took $49.5B and Chrysler $10.4B.
    GM owes $21B in principal offset by $10.3B in interest, dividends, stock, my estimate.
    Realized losses as of 12/31/13 are $11.6B for Chrysler and GM, $10.3 to GM.
    $700M is peanuts.

  • avatar

    Is Sergio Marchionne a Fascist parasite? Shocking. These filthy socialist animals have no shame. What can one expect from a Bilderberg slime that claims to own everyone and their incomes.

    He just got access to multi-billions of Chrysler cash. Did he already use it all bailing out Fiat?

  • avatar

    Should Canada pay $70k for an auto assembly jobs?

    A huge problem for rapidly dying Canadian manufacturing is the strength in the Canadian dollar. Driven by its boom in energy exports.

    Use those energy windfall profits to subsidize manufacturing.

    All the Asian Tigers have devalued their currencies to crush American manufacturing. I’m not sorry to see Korea esp. Hyundai) give Japan a taste of their own medicine.

    As far as buying equity in Fiat …. if they wanted to go that route, they could have bought Chrysler in its entirety 1988 for roughly nothing.

    I like the Demming/Quality story a much as the next guy, but imho, quality and content are very achievable with the tale winds of a cheap currency. With a strong currency — not so much. But that isn’t much of a story.

    • 0 avatar
      Big Al from Oz

      I think you’ll discover that the US is indeed the one who has devalued it currency to gain some competitive advantage from the developing Asian countries. The Euro’s and Japanese have done the same.

      The Canadian’s have to make a decision for their country like Australia has done. The Canadian’s have to ask themselves as a nation do we want to compete with developing nations, or progress with new and challenging ideas.

      It’s easy to feel comfortable with the past, especially with the comments I see regarding vehicle assembly and manufacture.

      Canada like Australia has a significant influence from the commodities sector. If the Canadian’s want to save money they should look at their agri subsidisation which is more per capita than the US. Look at the Canadian tax dollar’s invested into failing industries.

      My view is to let the US manufacture and compete with third world nations and not drag Canada into the same race to the bottom.

      But, like Australia you will have a group supporting the ‘past’ and not willing to venture out and create a better Canada.

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