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Monday, June 13, 2016

Fiat Chrysler to receive $80-million in grants from Ontario government

The Glob and Mail/Greg Keenan

The Globe and Mail
Published Monday, Jun. 13, 2016 7:38PM EDT

The Ontario government will contribute about $80-million to Fiat Chrysler Automobiles NV, restoring some harmony to a relationship that soured when the auto maker sought financial assistance for its minivan factory in 2014.

The auto maker will receive grants that will cover some of the costs of upgrading its assembly plant in Windsor, Ont., and help finance a project at the company’s research and development facility in the city, sources familiar with the announcement said.

Ontario Premier Kathleen Wynne is scheduled to make the announcement Wednesday at the Fiat Chrysler (FCA) Automotive Research and Development Centre in Windsor, the sources said.

The bulk of the money will go toward helping the auto maker defray some of the $1-billion (U.S.) it spent upgrading the plant to produce a new generation of minivans. The first model of the new Pacifica, which includes a plug-in hybrid electric version that could help the province meet its climate-change goals, rolled off the assembly line on Feb. 29.

Every assembly plant that has been constructed or retooled for new vehicles in the past 15 years has included some form of government financing, said one source familiar with the company’s plans.

Those plans include an FCA investment in the R&D project, sources familiar with the announcement said. The federal government is not expected to participate.

FCA Canada spokeswoman LouAnn Gosselin would not comment.

The financing announcement comes about a month after officials at Unifor, the union that represents FCA hourly paid workers, criticized the Ontario and federal governments because they did not initially provide funding for retooling the factory.

But the path to Windsor continuing as the production site of one of the most successful vehicles in the history of Chrysler Corp. and its successor companies was a rocky one.

The company originally asked the federal and Ontario governments for an estimated $700-million contribution to a $3.6-billion project that also included a retooling of FCA’s other Canadian assembly plant in Brampton, Ont.

But the request turned into a political football during an election year in Ontario, with then-Progressive Conservative leader Tim Hudak slamming the idea as “corporate welfare.”
That comment and the delay negotiating that amount of money with two levels of government would impose on getting the new minivan to market prompted FCA chief executive officer Sergio Marchionne to pull the company’s request for funding and finance the retooling of the Windsor plant on its own. That raised questions about the future of the Brampton plant, which is the No. 1 issue for Unifor in this summer’s negotiations with FCA on a new labour contract.

The frosty relationship between the government and the company appeared to begin thawing last summer, when Mr. Marchionne and Ms. Wynne sat together at a luncheon at the Global Forum conference in Toronto.

While Mr. Marchionne took Ontario to task at a news conference after that luncheon, saying its provincial pension plan and cap-and-trade system to reduce greenhouse gas emissions helped make the province “not what I would call the cheapest jurisdiction in which to produce,” he also praised the Premier for being “incredibly responsive” to his concerns.

The company’s Automotive Research and Development Centre opened in 1996 and employs about 180 people.

The announcement of a new research project will be the second significant boost to automotive R&D in Ontario in less than a week.

General Motors of Canada Ltd. said last week it will hire about 750 engineers over the next few years at existing locations in Ontario and open a new engineering software office in Markham, Ont., to help develop autonomous vehicles, battery-powered automobiles and the connection between vehicles and the Internet.

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