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Restructuring plans submitted to Ontario, Canadian governments

Posted Monday, Dec 8, 2008 at 11:38 am in Company News


In response to a joint letter from Tony Clement, the Canadian Minister of Industry, and Michael Bryant, Economic Development Minister for Ontario, Chrysler Canada submitted its detailed operational and restructuring plan on Dec. 5 to both ministers.

In its submission, Chrysler Canada provided an overview of its Canadian operations, its impact on the Canadian economy and its plan for long-term viability. The plan was supplemented with information submitted to the U.S. government earlier in the week.

According to Reid Bigland, President and CEO of Chrysler Canada, “Our request for a temporary and fully repayable loan from the Ontario and Canadian governments is really two-fold. First, to ensure Chrysler has sufficient funds to complete our restructuring activities during what is an unprecedented downturn in vehicle sales caused by the global financial crisis and second, to ensure Chrysler Canada’s substantial Canadian manufacturing and operational footprint is protected.”

Chrysler Canada is a major Canadian corporate citizen. The company has been, and will continue to be, a mainstay of the Ontario economy. Nevertheless, challenges within the global economy in general and the automotive industry in particular present significant obstacles which Chrysler Canada must surmount in order to remain a vibrant pillar of the Canadian and Ontario economies. As a predominantly NAFTA-based manufacturer and distributor, Chrysler is facing continued risk with the tightened credit markets and the resulting slumping auto industry.

During the first six months of 2008, Chrysler was on target with respect to its recovery and transformation plan. In July 2008, prior to the full onslaught of the global credit crisis and the company’s forced withdrawal from the leasing market, Chrysler Canada had experienced 23 consecutive months of year-over-year sales growth—unprecedented in the history of the company and, notwithstanding, the restructuring initiatives throughout the same period.

The global credit crisis intervened, creating a liquidity crisis that reduced or eliminated customers’ access to credit leading to a dramatic and historical downturn in North American vehicle sales, and it placed the company’s restructuring plan in jeopardy.

Chrysler’s strategic plan is three-fold:
• Reduction of fixed costs
• Investment in new vehicles and technologies
• Formation of strategic alliances and partnerships

This year, Chrysler Canada celebrated its 83rd year as a senior member of Canada’s industrial community. During the last eight decades, the company has grown from 181 employees to the current 9,800 employees making Chrysler Canada one of the largest employers in Ontario and Canada, and in particular the communities of Brampton and Windsor.

For every employee at Chrysler Canada, the company supports more than one retiree. Retirees now exceed 13,000 Canadians who draw direct retirement benefits from Chrysler Canada.

The financial support of the current and former employees of Chrysler Canada, and their families and dependants, make up a population of more than 50,000 Canadians who rely on the health and well-being of Chrysler Canada.

Chrysler Canada’s network of 454 Chrysler, Jeep® and Dodge dealers across Canada employs more than 24,000 Canadians.

Chrysler Canada is headquartered in Windsor. The company operates vehicle assembly plants in Brampton and Windsor, Ontario, and a casting plant southwest of Toronto. Collectively, the plants assemble more than half a million vehicles a year of which 86 percent are exported to the United States. For the past several years, the assembly plants have supported three shifts, although recently a shift was eliminated at Brampton Assembly Plant to adjust production to the current reduced sales levels in the U.S. market. The Windsor Assembly Plant, the largest plant in the Chrysler manufacturing network, still supports three shifts.

Chrysler Canada’s award-winning research and development center, located in Windsor, is a partnership with the University of Windsor and has provided engineering support for design analysis and testing for more than 20 years. The University of Windsor/Chrysler Canada Automotive Research and Development Centre has led and supported many advanced technology development programs such as propane fueled vehicles, natural gas powered vehicles and electric vehicles.

Chrysler products have sold very well in the Canadian marketplace. Each year, Chrysler Canada sells approximately 230,000 vehicles—representing 13.5 percent share of the market—to Canadian consumers who rely on Chrysler Canada for their service/warranty and spare parts.

In 2007, Chrysler Canada became the second highest seller of vehicles in Canada, second only to General Motors Canada. Further, and in the same year, Chrysler Canada gained more market share and incremental sales than any one of the 20 vehicle sellers that it competes against in Canada. Chrysler Canada was the only manufacturer to have two of the top-five highest selling model vehicles in the country—the Windsor-built Dodge Caravan and the Dodge Ram pickup truck.

Chrysler’s product lineup is aligned with the Canadian market, offering the best value to Canadian consumers and the most fuel efficient lineup in the company’s history. With more than 12 new-vehicle launches in the last 18 months, Chrysler Canada offers one of the youngest portfolios in Canada. More than 40 percent of the company’s sales in Canada are fuel-efficient, four-cylinder gasoline and diesel engine vehicles.

Chrysler Canada is very proud of the fact that for the last 25 years it has and continues to build and sell the No. 1-selling minivan in Canada—a title to which no other company comes close. More recently, Chrysler Canada earned the title of No.1-selling crossover vehicle in Canada for the recently introduced Dodge Journey.

Chrysler Canada remains confident that with the provision of a bridge loan for its Canadian operations, Chrysler can complete its restructuring plan and achieve long-term viability.
 

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Chrysler Canada May Shut Plants

Chrysler Canada May Shut Plants Unless Aid Given, GlobeMail Says


Dec. 9 (Bloomberg) -- Chrysler Canada Inc. may close its two assembly plants in Canada unless the Canadian and Ontario governments provide C$1.6 billion ($1.27 billion) in emergency aid, the Globe and Mail reported, citing a restructuring plan filed last week.

Chrysler, Ford Motor Co. of Canada Ltd., and General Motors of Canada Ltd. have asked for C$6 billion in loans, loan guarantees and lines of credit; the three automakers may need as much as C$7.2 billion if the auto market deteriorates and GM Canada needs to draw down C$1.2 billion in addition to the C$2.4 billion the company requested, the newspaper said.

Canadian government and industry officials have expressed concern that U.S. aid for the automakers may come with conditions that favor their domestic operations, the newspaper said.
Last Updated: December 9, 2008 04:16 EST

LINK:Bloomberg.com: Canada
 
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