February 13, 2014 / 5:38 PM / 5 years ago

Chrysler not close to deal on multibillion-dollar Ontario investment

TORONTO (Reuters) - Chrysler Group LLC is more than halfway toward making a deal with the Canadian government on a proposed multibillion-dollar investment to upgrade its two Ontario facilities, including its minivan assembly plant in Windsor, its top executive said on Thursday.

A Chrysler badge is pictured on a new car at a dealership in Vienna, Virginia April 26, 2012. REUTERS/Kevin Lamarque

Sergio Marchionne, the chief executive officer of Fiat Chrysler Automobiles Group (FCA), had previously said the decision hinged on economic incentives from Canada and the province of Ontario.

Chrysler’s proposal would be the single largest investment made by any automaker in Canada since before the financial crisis, Marchionne said, and would also be the largest investment by the company since Fiat helped to rescue Chrysler from bankruptcy in 2009.

“We’re not even close to a resolution of a proposal that is acceptable to us,” Marchionne told reporters at the opening of the Canadian International Auto Show in Toronto, adding that he thought they were “over 50 percent” of the way toward making a deal.

Marchionne would not confirm the investment amount being discussed, but said it would cost at least $2 billion to build a completely brand-new multi-vehicle assembly platform at the Windsor plant.

Windsor is Chrysler’s only minivan assembly operation and Marchionne said the proposed investment would mean the jobs at that plant would have “substantial longevity” if market demand remained in place.

Representatives in other countries, including the United States and Mexico, have already approached the automaker in hopes of luring its minivan business away from Canada, he said.

The amount other jurisdictions would offer are likely more than what would be offered from a Canadian proposal, he added.

Marchionne, who moved to Canada from Italy at the age of 14, said he is hoping to keep his minivan business in Canada.

“I am Canadian. ... I’m not confused about that issue. So I’ll do a variety of things for this place that will twist me into a pretzel, but you can’t put me over a barrel,” he said.

“I just want a level playing field. If the prime minister can guarantee me that at the end of the day, we will not be subject to non-trade barriers, then I’ll be fine.”

Marchionne noted that of the $42 billion invested into North American auto production in the last five years, only five percent went to Canada.

“There’s got to be something structural that is making this jurisdiction less appealing than others,” he said, adding that it was crucial that Canada preserve and defend its manufacturing industry.

The federal government indicated on Wednesday that it might offer cash to keep Chrysler from moving the Windsor operation elsewhere.

The comments followed the Canadian government’s budget announcement earlier this week. It included a promise to infuse the Automotive Innovation Fund with an additional C$500 million ($455.15 million) over the next two years to subsidize the country’s auto sector, which has seen its share of North American production decline.

Finance Minister Jim Flaherty said on Wednesday that not all of the new money is meant to meet Chrysler’s “substantial” demands.

Unifor, Canada’s main auto union, represents about 4,500 hourly assembly plant workers in Windsor. They assemble about 1,500 Chrysler Town and Country and Dodge Grand Caravan minivans over three shifts each day, or one minivan every 44 seconds, according to Unifor Local 444 President Dino Chiodo.

Chrysler is also seeking money for its other Canadian plant in Brampton, Ontario, which builds cars including the Chrysler 300 and Dodge Challenger.

($1 = 1.0986 Canadian dollars)

Additional reporting by Susan Taylor in Toronto; Editing by Jeffrey Hodgson, Lisa Von Ahn and Richard Chang

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