UPDATE 1-Canada signals it may help Chrysler on Ontario plant investment

Wed Feb 12, 2014 4:03pm EST
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By Randall Palmer and Solarina Ho

OTTAWA/TORONTO Feb 12 (Reuters) - Finance Minister Jim Flaherty, freshly armed with C$500 million ($455 million) to subsidize Canada's auto sector, signaled on Wednesday the federal government might offer substantial cash to keep Chrysler Group from closing an Ontario minivan plant.

Fiat SpA Chief Executive Sergio Marchionne said last month that Chrysler could scrap an upgrade of the Windsor, Ontario, plant and move production and jobs elsewhere if the government fails to come through with financial incentives.

Canada's Conservative Party government sharply increased money available for its Automotive Innovation Fund in its annual budget on Tuesday as it seeks to arrest the decline in the country's share of North American car manufacturing.

Flaherty said not all of the new money was designed to meet what he called Chrysler's "substantial" demands. He added that he was not saying automobile plant subsidies should be seen as automatic.

But he did tell reporters: "I am saying that we need to give it a long, hard look and make sure that we are careful in what we do before we let one of the large auto manufacturers leave Ontario."

The Globe and Mail, citing unidentified sources, reported on Tuesday that Chrysler was seeking a contribution of at least C$700 million from the Canadian and Ontario governments.

That figure is higher than the number reported by the National Post last week. The paper said Chrysler was looking to invest at least C$2.3 billion in Windsor and was seeking at least 20 percent, or C$460 million, from the federal and Ontario governments.   Continued...