| Subject: Is this "free enterprise" c. 2003?? |
Author:
Margo
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Date Posted: 22:23:48 02/19/03 Wed
Author Host/IP: h24-80-4-138.vc.shawcable.net/24.80.4.138
I was shocked when I first saw this article in last Friday's Post. I hope someone can tell me (definitely "economics challenged") what I have missed here? --
** I see a big U.S. auto company demanding almost a blackmail. What happened to free enterprise? Why does Ford need government handouts now?
** What about the NAFTA? Won't the other auto makers (see penultimate paragraph) sue us for giving Ford some kind of unfair advantage with this kind of subsidy? Or will we have to hoof over $250 million to each of the auto makers?
** And how come a Republican U.S. government would be forking over this kind of money in their "free enterprise" system, I don't get it. This sounds like corporate socialism to me. I thought we don't do this any more?
** David Orchard has proposed we produce a Canadian car. Sounds from this article like we are ace car producers. Maybe we ought to be looking into that instead of handing out millions to big profitable U.S. auto companies. (Yes, I know it's provincial ON gov - but public money is public money).
...................................
Auto plant to cost Ontario $250M in incentives:
Ford Limited spending offered:
'That answer tells me they don't want to be competitive'
Paul Brent
Financial Post -
Friday, February 14, 2003
Ford Motor Co. wants government incentives of about $250-million if it is going to build a state-of-the-art automotive plant in Oakville, Ont., an executive with the Detroit-based automaker said yesterday.
"We're talking about a big investment here," Jim Padilla, executive vice-president of Ford's North American operations, told reporters at the Toronto auto show. "Maybe [the investment] is $1.2-billion, whatever it is, you're going to have to be in the range of 20% of the [investment] to make or break the deal."
Ford, like DaimlerChrysler AG, promised the Canadian Auto Workers union it would build a modern flexible manufacturing auto factory in return for the CAW's approval to close an obsolete factory. Both proposed plants are dependent on government financing and Germany's DaimlerChrysler, in discussions with the Ontario and federal governments, wants as much as $400-million to build a new facility in Windsor.
Mr. Padilla, the Ford executive who determines where new plants are built in Canada, the U.S. and Mexico, has been following the DaimlerChrysler discussions.
Commenting on the Ontario Tory government's hardline position that it would only offer infrastructure and training spending to land new auto factories, Mr. Padilla said: "That answer tells me that they don't want to be competitive."
Ford, which lost US$980-million last year, needs to eliminate about one million vehicles worth of capacity, a move which meant the death knell for the Oakville truck plant, which is slated to close in July of 2004.
The Ford executive argued yesterday that government incentives have become the cost of doing business to land plants which employ thousands of workers. "We need the help because we need to be competitive in this whole thing," Mr. Padilla said. "If you have [foreign] transplants coming in, getting all these incentives with no legacy costs on top of them, we're chinning all that burden."
DaimlerChrysler recently received US$325-million worth of tax breaks to build a new plant in Georgia and Toyota Motor Corp. announced last week it would build a new pickup truck in Texas after receiving at least US$133-million worth of incentives from the state government. This week, Ford said it would begin assembling the Ford Mustang at its underutilized factory in Flat Rock, Mich., after it received US$120-million in assorted subsidies.
"Frankly that is not on the high end of what people are willing to do -- and that is an existing plant," he said.
"Canada has to step up," Mr. Padilla said, noting that Ford Canada does not require infrastructure spending, since a new flexible plant could be built at the existing pickup factory.
Although Ford has not met with government officials as yet, Mr. Padilla has a shopping list. "Training, incentives, facilities, tax breaks, you know, over a 10-year period," he said. "It's not like you'd get an upfront, here's cash on the line."
Canada is the preferred choice for Ford's proposed flexible plant - which could build up to nine different vehicles -- because of the cost advantages of the weak Canadian dollar and an existing skilled workforce. Ford's massive Windsor operation builds more than 1.2 million engines annually, mainly for its highly profitable pickups and sport utilities, while it is also the sole supplier of the Windstar minivan (Oakville) and the Crown Victoria and Mercury Marquis sedans from its St. Thomas, Ont. plant.
Mr. Padilla's comments overshadowed Ford's launch of the restyled Windstar minivan, now called the Freestar. The 2004 Freestar will be built in Oakville along with the new Mercury Monterey with more luxury features.
The vast majority of Ford Canada's production is shipped south, at an undisclosed profit. The Canadian unit actually loses money on the so-called marketing side of its business: selling automobiles. "We have to do damn well on engines in order to make up for the marketing side," Mr. Padilla acknowledged. "The balance probably isn't too bad."
DaimlerChrysler and Ford's cries for government assistance to build new assembly plants isn't shared by the other member of the big three, General Motors Canada. GM, like the Ontario government, contends that any assistance given to one particular automaker should be available to all.
"We certainly don't want to see a competitive advantage delivered to one of our competitors," Faye Roberts, GM Canada's manager of government relations, said this week at the Toronto auto show.
pbrent@nationalpost.com
© Copyright 2003 National Post
article at: http://www.nationalpost.com/search/site/story.asp?id=B0B300AD-D231-4764-983D-A60489846C4C
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