Tuesday, August 18, 2009

Chrysler to Build Fiat Cars in Mexico

Boy oh boy, talk about being naive--I was going to say boy scouts, but I have too much respect for them. This news is not surprising, but I still feel like we in Canada, and Windsor-Essex in particular, have been run over by a Mack Truck--no excuse me, a Fiat 500.

Over the past few months, I have written numerous stories of the Chrysler give-away to Fiat. Time and again I pointed to circumstances not well explained. Time and again I implored our local newspaper to do an in-depth analysis of this deal, the Fiat balance sheet, and what we would get. The response from the Windsor Star, nothing, on occasion, an embarrassing piece of journalism. Senior management at the Windsor Star chose to deploy their staff and resources elsewhere.

Below is an article published online Monday August 17, 2009:

AP Source: Chrysler to build Fiat 500 in Mexico
By TOM KRISHER (AP)

DETROIT — Chrysler Group LLC, now being run by Italian automaker Fiat Group SpA, is planning to build the Fiat 500 minicar at a factory in Mexico, according to a person briefed on the company's plans.

The automaker also is considering building a compact car in the U.S. that could be larger than the 500, according to the person, who did not want to be identified because the plans have not been made public.

Chrysler spokesman Gualberto Ranieri declined to comment Monday. But news of the Fiat 500 decision disappointed several members of the United Auto Workers union who had hoped that the minicar would be made at a U.S. factory because of UAW cost-saving concessions and the fact that Chrysler has received $15.5 billion in U.S. government aid.

It was not clear which Mexican factory would get the 500, but it likely would be a plant in Toluca that builds the PT Cruiser sedan and Dodge Journey crossover and employs more than 2,100 workers organized under a Mexican union. Chrysler also has a truck assembly plant in Saltillo, Mexico.

Even though the UAW has made concessions to reduce labor costs, workers still make far less per hour at Mexican factories. Since small cars generally fetch lower prices than larger vehicles, the profit margins are narrower, making low costs important. Also, Mexican factories are closer to Brazil, a key market for Fiat.

Turin-based Fiat's management is trying to turn Chrysler around. The Italian automaker took a 20 percent stake in Chrysler earlier this year as part of its exit from bankruptcy protection. The U.S. government owns an 8 percent stake in the Auburn Hills, Mich.-based Chrysler, which lost $8 billion last year.

Fiat, as part of its purchase, had announced plans to bring the hugely popular 500 to the U.S., along with the Alfa Romeo brand and Fiat-designed compact and midsize cars. The Italian automaker also plans to bring engines, transmissions and other technologies to Chrysler.

UAW members were hoping that Fiat would build the 500 at an assembly plant in Sterling Heights, Mich., which is slated to close by the end of 2010.

"We want to keep as much work as we can in this country and in Michigan," said Bob Stuglin, president of a UAW local at the Sterling Heights parts stamping plant which is close to the assembly facility.

Stuglin, who said he had not been told of the decision by the company, said that UAW workers have given up a lot in an effort to keep work at their factories.

The Wall Street Journal reported Chrysler's decision on Monday.

AP Auto Writer Dan Strumpf in New York contributed to this report
-------------------------------------------------------------------
Given all the concessions made by auto workers, all the taxpayer money invested, and given our capacity and capabilities in the US and Canada, and right here in Windsor-Essex, this move by Fiat should at the very least be up for review.

Oh, and by the way, I wonder how much Mexico invested to save both Chrysler and Fiat?