Chrysler pulls financing requests to Ottawa, Ontario amid turmoil

WINDSOR, Ont.—Chrysler said it has withdrawn financial assistance requests submitted to the federal and Ontario governments due to the political implications they have had in recent weeks.

“It is clear to us that our projects are now being used as a political football, a process that, in our view, apart from being unnecessary and ill-advised, will ultimately not be to the benefit of Chrysler,” Chrysler said in a statement released March 4.

The automaker had submitted requests to Ottawa and Queen’s Park for financing to help expand its plants in Windsor and Brampton, Ont.

Steve Rodgers, president of the Automotive Parts Manufacturers’ Association (APMA), said he was a caught off guard by the announcement, and is working to determine what motivated Chrysler to withdraw the funding requests.

“Early on, I would have to say it would be very disappointing if somebody else has stepped into the breach and convinced Chrysler to go in a different direction with respect to facilities,” Rodgers said in an interview. “At this point it looks like it could be setting us up for a huge disappointment.”

Ontario Progressive Conservative Leader Tim Hudak urged the governing Liberals last week to deny Chryler’s “ransom” demand in response to its request for a reported $700-million from the two governments.

“Should we pay a nine figure ransom to Chrysler? Of course not,” Hudak said last week, according to The Canadian Press.

The automaker said it would instead “fund out of its own resources” the necessary capital for retrofits at the plants, but was unclear about whether the lack of government financing would impact the scope of the work.

Chrysler builds its Dodge Challenger and Charger models at the Brampton plant, and its minivan models in Windsor.

Part of the internal talks at Chrysler surrounding its Canadian plants involve the development of its next-generation minivans.

“These capital allocation decisions will be governed by and continuously monitored on the basis of a variety of considerations that determine the competitiveness of Canada first and foremost in a NAFTA context but also increasingly on a global basis,” Chrysler said.

It also warned of the potential impact upcoming collective bargaining talks with the union representing workers on the facilities may have on expansion plans in the province.

Those negotiations are set to kick off in 2016.

“It is my sincere hope that all stakeholders involved commit to do what they can to preserve the competitiveness of the country, and in particular of the province of Ontario,” Chrysler CEO Sergio Marchionne, a Canadian, said in the automaker’s statement.

“We will do what we can to preserve and nurture the competitiveness of our operations, but we reserve the right, as is true for all global manufacturers, to reassess our position as conditions change.”

According to Rodgers, the importance of Chrysler’s expansion here becomes increasingly important with Canada negotiating its Comprehensive Economic and Trade Agreement (CETA) with the European Union.

“Going into the future, we had counted on the fact that with the Canada-Europe free trade agreement, the ability to do a new global platform in Windsor would have been a distinct advantage for that assembly facility and for the Canadian automotive industry,” he said.

“This would would definitely be a trend in the wrong direction.”

Rodgers, though, is remaining optimistic deals can be put in place to preserve the production at Chrysler’s facilities, and thinks the automaker’s sales in recent months will only drive its need for more capacity.

“I don’t think it’s too late,” Rodgers said. “I still think there’s time, I still think there’s definitely an opportunity to put something in place here from a capacity standpoint.

“We truly believe that Chrysler needs that capacity … and we don’t think it’s too late for that.”