It’s no secret that Ontario’s auto sector has suffered in recent years, but the Italian-Canadian CEO of Fiat Chrysler says the province’s government is heaping more problems onto the sector.
Sergio Marchionne says Ontario’s plans for a provincial retirement pension plan and a cap-and-trade climate policy will further hurt the province’s manufacturing sector.
“These are all things that add cost to the running of an operation,” Marchionne said, as quoted at the Globe and Mail. “They don’t come for free. They cost money. You start adding up the bill.”
Marchionne made the comments to reporters at the Toronto Global Forum on Friday after sitting next to Kathleen Wynne during the conference lunch.
Fiat Chrysler Automobiles operates two plants in Canada, and recently announced a $2-billion U.S. investment into the Chrysler mini-van plant in Windsor. On Sunday, the Fiat CEO's comments got backing from Windsor's mayor.
Marchionne’s remarks “are consistent with what we’re hearing,” Drew Dilkens said, as quoted at the Windsor Star, noting in particular concerns about electricity rates in the province. “All of these things really need to be thought through in [terms of] our ability to attract investment.”
The Windsor area recently lost two potential multi-billion-dollar auto plant investments after Volvo and Jaguar chose to build plants in the U.S. instead, the Star reported.
Canada has fallen far behind in attracting new auto investment in recent years, to the extent that Mexico has surpassed it as an auto producer. One analyst is so bearish on the industry’s prospects that he has placed a date on when he expects the last car to roll off a Canadian assembly line: 2040.
Many economists have blamed a high loonie and low-cost competition from abroad for the decline of Ontario’s automotive industry, but the industry points to other factors as well, such as Ontario’s electricity rates and the cost of labour, which has moved above some jurisdictions in the U.S.
“This is not what I would call the cheapest jurisdiction in which to produce,” Marchionne told reporters Friday.
But he had positive things to say about this discussions with Wynne, and even hinted the provincial government may be willing to alter course on some policies.
Wynne was “incredibly responsive,” Marchionne said. “I think we had confirmation that the argument is not falling on deaf ears. … If you had to ask me today, I would expect that sense would prevail.”
One bright spot for the industry: With the falling loonie helping exports, Canadian auto manufactureres can expect to see their most profitable year since 2002, the Conference Board recently said.
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