Why did Chrysler ask for $700M in taxpayer money? Because it’s there

By Andrew Coyne
National Post: March 5, 2014

I think we should give the chairman of Chrysler the benefit of the doubt. I think he is entitled to the presumption that, when the company demanded $700-million in government grants and loans to retool its Windsor and Brampton, Ont., plants, it was acting in good faith; that when he warned without such assistance, the company might take its investments elsewhere — the periodic payment of such enormous subsidies to gigantic multinational auto manufacturers being essential to maintaining Canada as “a globally competitive jurisdiction” in the competition to subsidize gigantic multinational auto manufacturers — he was being perfectly sincere, in the sense he sincerely wanted the money.

That is, I think we should assume, when Chrysler asked for the $700-million in January, it had no plans to renounce it in March: or in other words, it was not just completely jerking us around.

But then if, as the company has now revealed, the money was never actually needed — if it will go ahead with the investment even without the government lolly or, as a company press release boldly announced, “fund out of its own resources whatever capital requirements the Canadian operations require” — then why did it ask for it in the first place?

Leave aside, for the moment, whether there is any economic rationale for taking from every other company and industry, the ones that can compete without subsidy, to give to a company that, by its own account, can’t. What Chrysler is now saying is there isn’t even a business case for it. The project is not, as claimed, dependent on it, either in an absolute (we can’t afford it) or even contingent (others will pay us more for it) sense. It was all a bluff.

Which being the case, we must reluctantly confront the possibility the only reason Chrysler asked for the money was … because it was there. To be fair, that’s more or less what Chrysler’s chairman was telling us, between the lines. In his celebrated op-ed piece for the Globe & Mail (“Why I’m asking taxpayers for money to invest”), Sergio Marchionne never actually came out and said “we can’t be bothered to raise the capital ourselves” or “this investment cannot be justified on its merits,” or even “nice assembly plants you got there, pity if anything should happen to them.”

Rather, all was coy ambiguity, heavily suggestive, yet free of anything the company could be held to account for. Chrysler was “committed” to Canada — and yet “our ability as a country to retain and attract manufacturing investments is severely challenged.” We “remain forever grateful” for the $2.9-billion bailout the company received from Canadian taxpayers not five years ago — and has not fully paid back — and yet not so grateful as to prevent us from coming back for more. But the key line was this: “in light of the federal government’s and the Ontario government’s past practices of providing support,” he wrote, “Chrysler Canada approached the governments to assess their level of interest in the investment.”

So: the reason we asked for the money now is because they gave us the money before. Or in other words, because it’s there. Whaddya expect us to do, he seemed to say, turn it down?

But if the money was not needed in this event, chances are it was not needed on all those previous occasions. If it will not accept this handout, perhaps it ought to give back the ones it accepted before — and its fellow automakers likewise. The company complains the issue has become a “political football” — Ontario Conservative leader Tim Hudak, among others, has urged rejection of its demand — but perhaps it should have become one long ago. For as inexplicable as the industry’s willingness to take money it does not need is the willingness of successive governments to press more upon it.

(Read the full article at: National Post)

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