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Saturday May 24, 2008

FIAT plant headed to North America

Ontario and Mexico top list for new factory location

 

By Angelo Persichilli

 

 

 

There is a solid possibility of FIAT’s arrival to Ontario, although at this point it is tied to the incentives that Dalton McGuinty’s government will offer the Turin automobile manufacturer. According to sources close to FIAT, directors of Lingotto [the district of Turin where the FIAT plant is located] are well aware of the advantages that Ontario can offer in terms of social stability, quality of workmanship and efficient services, but there are also disadvantages such as the high labour costs and the non-ideal geographic location assuming that the company will also market to Central and South America.
This last point definitely favours Mexico. According to some, the final choice is not between Canada and the U.S. but between Canada and Mexico. The decision, however, is also dependant on other factors, such as supply and distribution channels. In effect, it appears that FIAT is working closely with Chrysler in the area of distribution and service throughout North America.
It’s apparent that the arrival to North America of the Turin house involves a series of initiatives to be dealt with before the carmaker will take a decision as to where the assembly plant will be set up. In fact, it would be a useless undertaking to manufacture a fine automobile if after-sales servicing is inadequate.
FIAT has already experienced a similar situation in the past and only now appears to have finally repaired the serious damage done to its credibility from ill-planned initiatives during the 1960s and ’70s. At this time, the group of experts under the guide of Sergio Marchionne is working on this and, even with the help of General Motors (in spite of strained relations last year), Chrysler seems to be in pole position.
A decision leaning towards Chrysler may already have been made by FIAT’s administrative council, and either way is imminent. Once this first phase decision is made, the next consideration is the selection of a site, which should come sometime this summer.

 

 

 

During his trip to Turin, Premier McGuinty did an exceptional job of promoting the advantages to FIAT for locating in Ontario – however these are factors which a company of FIAT’s magnitute would already have made note of. Nonetheless, with due diligence, such data and information can be found on internet.
So the only unknown is in respect to the economic incentives - whether they’ll be direct or indirect - which the Province is prepared to grant FIAT. According to some auto sector observers, such an offer could tip the scales either in favour of or against Ontario. But no such offer has yet been made, so the decision remains up in the air. And it had been established in the interview with Corriere Canadese/Tandem – the one where FIAT put the ball back into McGiunty’s court - that FIAT’s administrative delegation is awaiting a decision from the provincial government.
As noted, FIAT has decided to return to North America in a big way, building the new Alfa Romeo to enter the market now dominated by BMW and Audi. Two thousand new vehicles are planned for assembly annually in North America. The initiative requires an investment of $1.6 billion (Cdn) and once set up, will create 2000 new jobs.
This would be a breath of fresh air for Ontario’s distressed automobile sector. Just recently, both Ford and GM announced layoffs of hundreds of workers and a reduced production quota in several of Ontario’s assembly plants.
As well as with the Alfa, FIAT intends to embark on the conquest of the North American market with a second automobile, the new “500,” which is currently being constructed in Poland. Considering rising costs, especially for gasoline, the new “500” could be the solution to many problems as far as gas consumption, lack of space, and parking.
FIAT, in case of a favourable decision for Canada, is obviously already oriented towards choosing Ontario. As far as a more specific area of the province, it appears that it would be somewhere along the Hwy 401 corridor between Toronto and Windsor. A definitive decision will be taken this summer. Until now, the only certainty is that Marchionne has decided to bring FIAT back to North America.