Two giants of the industry contemplate joining forces, Ontario plants watch with interest
Canadian automobile manufacturing will be a small contributor to the reshaping of the global industry stemming from a merger proposed on Monday by Fiat Chrysler with France's Renault to create the world's third-biggest automaker.
The merged company, which would combine forces in the race to make new electric and autonomous vehicles, would produce some 8.7 million vehicles a year, leapfrogging General Motors and trailing only Volkswagen and Toyota.
Roughly half a million of those vehicles are produced in Canada at Fiat Chrysler's Windsor and Brampton plants, which employ about 9,700 people, while Canadian sales amounted to 225,000 vehicles or about 11.3 per cent of the domestic market last year. Renault doesn't have a manufacturing presence in the country.
Shares of both companies jumped on the news of the offer, which would see each side's shareholders split ownership in the new manufacturer.
Renault welcomed what it called a ``friendly'' offer. The company's board met Monday at its headquarters outside Paris and said afterward that Renault will study the proposal ``with interest”. In a statement, Renault said such a fusion could ``improve Renault's industrial footprint and be a generator of additional value for the Alliance'' with Japan's Nissan and Mitsubishi.
Fiat Chrysler's offer comes at a key moment for Renault. The French manufacturer had wanted to merge fully with Nissan, but those plans were derailed by the arrest of boss Carlos Ghosn on financial misconduct charges in Japan.
Now, questions are growing over the Renault-Nissan-Mitsubishi alliance, which together make more passenger cars than any one company. While Fiat Chrysler says the merger with Renault would accommodate the alliance and lead to savings for them, it is unclear how the Japanese companies might react in the longer term to being tied to a much larger partner.
A deal would save 5 billion euros (C$7.5 billion) for the merged companies each year by sharing research, purchasing costs and manufacturing and tooling efficiencies, Fiat Chrysler said. It promised the deal would involve no plant closures, but didn't address potential job cuts.
Fiat Chrysler employs about 180 people at its research and development centre at the University of Windsor, along with 300 people at a casting plant in Etobicoke, Ont., and controls three facilities in Ontario under the CpK Interior Products banner.
The company, which produces the Dodge Grand Caravan, Challenger and Charger and the Chrysler Pacifica and 300 in Canada, said in March that it would cut a shift at its Windsor minivan plant at a loss of about 1,500 jobs.
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