Why Is The Auto Industry Sacred?

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    Wherein we see that once the subsidy taps are opened, they don’t get closed. There is one  large Canadian company, world-renowned, whose governments subsidies are greater than its profits. Why is this good policy?  If it is, then we should borrow money to subsidize companies which pay incomes much greater than the average income of those responsible for paying off the debt. This must be the new economy they’re teaching in government schools.

National Post – (Latest Edition)
BY SCOT T DEVEAU

Chrysler CEO fuels fire on subsidies
TORON TO • Sergio Marchionne, Fiat Chrysler Automobile chief executive, had a tough love message for Canadian taxpayers Thursday: Forget the outstanding balance from Chrysler’s bailout in 2009, and focus on the multi-billiondollar investment in Ontario the Detroit automaker has proposed to the provincial and federal governments.

Mr. Marchionne said Chrysler has taken its case directly to Prime Minister Stephen Harper and Ontario Premier Kathleen Wynne. But if the Canadian governments choose not to participate in the proposed investment in its Windsor and Brampton plants, there are plenty of other jurisdictions that will.

He said “everybody” was competing for the investment Chrysler wants to make in Ontario, including the U.S. and Mexico, and that Canada is like “a guppy in shark-infested waters.” “This is not a game for the faint-hearted. It takes resolve, and it takes cash,” Mr. Marchionne said at the opening of the Canadian International Auto Show in Toronto.

Mr. Marchionne said he might be viewed as a “sinner” for asking for more. But he said that’s the reality of the business.

“I may be a sinner. But I make cars,” he said. “You may not like the sin, but there’s nothing I can do about it. I can’t change my profession, unfortunately.”

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  He makes cars and, apparently, as a tax producer, so do I. The difference is, I have to buy them twice if I want one. If I don’t want one, I only have to buy them once.

Canada has already seen nine of its assembly plants close since the auto pact was signed in 1965, losing tens of thousands of jobs along the way. A tenth — General Motors’ consolidated plant in Oshawa — is slated for closure in 2016.

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    And the pampered union members will then not be working at high paying jobs with fantastic benefits.

Canada has also only won about 5% of the $42-billion in new investments automakers have made in North America over the past five years, Mr. Marchionne said.

“There’s got to be something structural that is making this jurisdiction less appealing than others,” he said.

Chrysler is considering a $3.6-billion investment in its Windsor and Brampton plants a source familiar with the talks confirmed Thursday. The source said $2.6-billion of that is earmarked for Windsor to build a new flex-line there, where multiple vehicles could be produced, and to help with the development of the next generation of minivan that would be built there.

The remaining $1-billion would go to the Brampton plant, where the automaker builds its Charger, Challenger and Chrysler 300, all of which will need to be revamped in the coming years. That will require retooling both the Brampton plant and its suppliers, which is commonly covered by the automaker as well, the source said.

The level of investment Chrysler is seeking from Ottawa and Ontario is still being discussed. But both levels of government have traditionally split about 20% of the total investment, or $720-million in the case of Chrysler.

Mr. Marchionne would not confirm any of those figures. But he said discussions continue with both governments, and hopes a decision will be made soon.

But the level of investment Chrysler is looking for is testing the limits of both governments. Ottawa did, however, increase its Automotive Innovation Fund by $500-million over two years in this week’s budget.

Chrysler’s request has put both levels of government in a difficult position, choosing between contributing more taxpayers’ dollars to a private, profitable company or risk losing thousands of jobs in the most economically hard-hit parts of the province.

He said Chrysler wasn’t looking for a simple handout. “It is taxpayer money. But it is taxpayer money that would be repaid,” he said.

But adding further fuel to the debate is that both levels of government contributed $2.9-billion to the bailout of Chrysler in 2009, $810-million of which has not been repaid, and likely never will be because it was given to the old Chrysler.

Mr. Marchionne said he had a “clear conscience” because any debt the new Chrysler owed Ottawa and Ontario after the restructuring has been repaid. “The restructuring should have happened way back then in 2008 and you would have avoided this problem because you would have saved your money,” he said. “But I can’t remake history.” He said Ottawa and Ontario need to decide whether they want to have a viable auto sector, and if so, they need to be willing to invest in it because other jurisdictions are aggressive about wanting the work.

He noted Chrysler’s recent investment in a plant in Brazil was made with 85% financing from Brazilian governments.

“The world is getting incredibly competitive,” he said.

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    If that’s the definition of competitive, the dictionary must be rewritten.

Mr. Marchionne, who shares Italian and Canadian citizenship, said he personally would like to see the investment go to Canada.

“I am Canadian,” he said, noting he would be cheering for the Canadian men’s hockey team Thursday in the Olympics. “I will do a variety of things for this place that twist me into a pretzel. But you can’t put me over a barrel. You just can’t.”

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     If we get more deals like this, we’ll soon have more abandoned plants, just like Detroit.

To order my novel, “Days of Songs and Mirrors: A Jacobite in the ‘45”, click here.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

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