Chrysler halts appeal for Canadian funds, will still invest in plants

Tue Mar 4, 2014 6:24pm EST
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By Susan Taylor and Bernie Woodall

TORONTO/DETROIT (Reuters) - Chrysler Group LLC said on Tuesday that it would push ahead with development plans for two key assembly plants in the Canadian province of Ontario, but will keep its "strategic options" open after withdrawing requests for government funding.

Chrysler, a unit of Fiat Chrysler Automobiles FIA.MI, said its appeal for cash from the governments of Canada and Ontario had become a "political football," showing the country's short-sighted view of industrial development.

Pressure began building around the issue in January, after Fiat Chief Executive Officer Sergio Marchionne said that Canadian governments needed to step up with financial incentives in order to secure Chrysler's investment plans. Back in 2009, the two levels of government had contributed about $2.9 billion toward Chrysler's bailout.

"As a Canadian, I regret my failure in having been unable to convey the highly competitive nature of markets that offer manufacturing opportunities to carmakers that operate on a global scale," said Marchionne in a statement. Marchionne has dual citizenship in Canada and Italy.

"Some of the shots across the bow following our initial approaches to the federal and provincial governments reveal, apart from political convenience, a somewhat restricted view of Canada as an industrial player in what has become a borderless economy."

Marchionne also said he hoped all stakeholders would preserve the country's and province's competitiveness, but reserved the right to reassess Chrysler's position if conditions changed. Some analysts and industry experts said that Marchionne was angling for a better position in negotiations by raising questions about the automaker's commitment to Canada.

Chrysler, which had reportedly sought $700 million in support toward a $3.6 billion investment, said it will still go ahead with plans to develop and produce its next-generation minivan at its Windsor, Ontario, plant, which employs more than 4,600 workers.

It will also produce revamped models of its Chrysler 300, Dodge Challenger and Dodge Charger at a Brampton, Ontario, facility, which has nearly 3,250 employees.   Continued...

A Chrysler auto worker uses an ergo-arm to load the seats into Chrysler minivans during the production launch of the new 2011 Dodge Grand Caravan's and Chrysler Town & Country minivans at the Windsor Assembly Plant in Windsor, Ontario January 18, 2011. REUTERS/Rebecca Cook