Monday 10 March 2014


Chrysler  was  begging  again  for more  money  

 Five years after Chrysler received 2.9 billion Canadian dollars from Canada’s government to help it stay in business, the automaker is looking again for more financial assistance. This time, it says it must have more financial assistance from Canada to continue producing minivans and other vehicles in Canada. It has threatened Canada by saying that if they don’t get any more money from Canada, it will move its Windsor, Ontario operation to Mexico or somewhere else other than in Canada.           

 But unlike five years ago, the demand no longer has a receptive audience as Canadians are fed up with coming to the aid of companies who can’t make a go of it. In a rare break with political tradition, the leader of the main opposition party in Ontario, a province that contributed to Chrysler’s 2009 rescue, is urging that both governments (provincial and federal) call Chrysler’s CEO, Mr. Marchionne’s bluff.

 Of the $42.3 billion invested in the North American auto industry between 2010 and 2012, as much as $2.3 billion was spent in Canada. According to the Bank of Nova Scotia, Chrysler Canada was the second-largest motor vehicle manufacturer in the country last year, after General Motors Canada, producing 572,000 vehicles and employing about 10,000 people. And the majority of that total came from a sprawling 4.4 million-square-foot plant in Windsor, Ontario, which has supplied the company with minivans since they were first introduced in 1983.

Chrysler is about to introduce a major redesign of those minivans, which are also exported to Europe under Fiat’s Lancia brand. But in conferences with reporters, Mr. Marchionne has indicated that minivans will not continue to call Windsor home without government aid.

I think Mr. Marchionne is jerking Canadians around. First of all, Chrysler hasn’t yet paid all that $2.3 billion back and now Chrysler has the temerity to ask for more money from Canadian taxpayers. I am not convinced that Canadian taxpayers are pleased at the prospect of continuing to underwrite Chrysler.  Should our governments continue to shovel in money to companies that are sponging off of Canadian taxpayers?                               

 Mr. Marchionne holds dual Canadian and Italian citizenship and moved to Canada with his family at age 14. He said, “We’re at the table. The car is ready. We’re ready to build minivans—somewhere.” Mr. Marchionne added that American states and Mexico were willing to help his company. “This is not a game for the fainthearted,” he said. “It takes resolve and it takes cash.” It also takes resolve to tell him to bugger off in the same way we tell a physically abled beggar on the street to bugger off.                                                                                  

This man is comparing Canada to a tiny guppy in waters infest with sharks. Well this guppy is fed up feeding this auto manufacturing shark. Surely it has enough fat within its system to keep from starving.

It has been estimated that $810 million Canadian dollars will never be recovered. That reflects loans that were assigned to Chrysler’s corporate entity before its bankruptcy.  If this guppy keeps feeding these auto manufacturing sharks, it will be paper-thin while swimming in Canadian financial waters.

Chrysler is now seeking another $700 million. Canada’s two governments are still determining what Chrysler plans to spend both in Windsor and at a plant in the Toronto suburb of Brampton, where it makes large rear-wheel-drive cars. A widely reported figure of $3.6 billion appears to include the substantial cost of engineering and designing the new minivans, work that was largely done in the United States. Why isn’t it still being done in the United States? It is cheaper to have it done in Canada? Cheaper to who? The taxpayers?

Admittedly, keeping Chrysler in Canada will keep the workers in the factories employed. But why should Canadian taxpayers subsidize Chrysler’s payroll if Canada isn’t a partner of the firm?

Alas, the Conservative federal government telegraphed its interest in a deal with Chrysler by adding $500 million Canadian dollars to its auto industry investment fund. Ontario’s Liberal government has also made it clear that it is also willing to lend Chrysler more money. Expecting to be repaid by Chrysler has about as much probability as Godzilla handing out business cards.

The province of Ontario should never have to bribe business to stay in our province. If they can’t make a go of it, they should never have come into our province in the first place.  It’s like bringing a beggar to your home for the sole purpose of him helping you pay the expenses of your mortgage with his rent money. 

Mr. Hudak, the head of the Ontario Progressive Conservative Party, said in an interview. “Our party did support the bailout because that was industrywide. We faced the whole industry getting wiped out. So we made that investment, and what did we get in return? Chrysler still owes us millions. We didn’t get the jobs.”

If Chrysler didn’t hire more Canadians to work in their factories after they got our money, then what benefits did Canadians per se get from giving such a large sum of money for Chrysler’s bailout? What was the money actually used for other than increasing the payout of Chrysler’s stock holders?

Chrysler owes Canada at a time when the country, once the largest exporter of vehicles to the United States, finds itself slipping rapidly behind Mexico, which did not aid Chrysler or General Motors when they collapsed into bankruptcy.

Now with all the flack hitting Chrysler, the auto giant pulled its requests in March of this year, by suggesting that the projects were being used as a political football that was unnecessary, ill-advised and ultimately of no benefit to the company. The money may have been beneficial to the company but the flack certainly wasn’t. There is nothing that pisses off a person looking for a new automobile than a potential buyer who suspects that the manufacturer is ripping off the taxpayers.

Chrysler very well may have a strong future in Canada, but it's not clear what that future looks like, in particular what that future will look like after it is running short of capital. Will its CEO extend his palm out while he has a handgun in his waist band?

Chrysler, in its final earnings release as a separate company, said its net income more than quadrupled to $1.62 billion in the fourth quarter, boosted by strong U.S. sales and a $962 million one-time tax gain. And yet the Canadian branch still had its hand out. This reminds me of that horrible woman in Toronto who was a beggar on the streets and at night, would return to her multi-million dollar home.

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