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Chrysler’s uncertain fate in Canada Recent rejection of government aid worries its 7,600 hourly employees as questions loom Max Zhu (@MaxZZhu) In a surprise move on March 4, Chrysler CEO Sergio Marchionne walked away from his public plea for government funding ahead of a much-needed $3.6-billion upgrade for the automaker’s plants in Brampton and Windsor. Citing that the project had become a “political football,” the Fiat Group (which wholly owns Chrysler) says it will now use its own resources to fund whatever capital requirement it needs at its Ontario operations. The makeover is anticipated to retool facilities with new technologies to continue production of the company’s popular Minivan model. Under the Harper-Flaherty-McGuinty auto bailout agreement in 2009, Chrysler is required to keep 16% of its global production in Ontario until 2016. The possibility the company could reallocate its investment to the incentive-rich regions of southern U.S. or Mexico, however, lurks behind its 7,600 employees in a struggling Canadian automotive industry that has seen foreign investment drop from 17 percent in 1999 to 4 percent in 2013. “(Chrysler) will do what we can to preserve and nurture the competitiveness of our operations, but we reserve the right, as it true for all global manufacturers, to reassess our position as conditions change,” said Marchionne in a released statement of the decision. Whereas its competitors such as Ford tapped into Ottawa’s $500 million Automotive Innovation Fund to expand its Oakville plant, Chrysler’s withdrawal leaves few “guarantees for Canadian production and a Canadian supply chain” says Essex Conservative MP Jeff Watson, whose riding is just south of the company’s Windsor site. The company purchased over $3.2 billion worth of goods from Canadian suppliers in 2013 and, with each direct employee, is able to support 5 to 6 others in backward linkages to feed over 500,000 Ontario families. Further job losses will particularly devastate the 3 million people living in Southwestern Ontario as it reels from recent departures by Kellogg’s, Heinz and Ford’s St. Thomas Assembly plant. And Canada will never win the battle of the bottom line. “"If it comes down to who has the lowest labour costs, it's simply a fight that we're never going to win," says Mike Moffatt, assistant professor of business, economics and public policy at the Ivey Business School at Western University in London. "What Canada offers is a combination of high-skilled [workers], high knowledge, (and) experience dealing with the supply chains. We have a lot of the existing infrastructure here.” It is highly unlikely that any jobs will be relocated in the short run. Both union leaders and auto analysts agree that Chrysler has no other North American facility to shift its Caravan production from its Windsor division where it has been produced since 1984, and should continue to concentrate its production until a significant cost advantage arises. With this decision, however, all possibilities are on the table and Southwestern Ontario must brave for further cuts to their glorified success stories of the late 20th century.


Chrysler's uncertain fate in canada