Building a Stronger Canadian Auto Industry

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Apr 30 2009, 4:30 pm by Conor Clarke

One odd little detail that I haven't seen come up in too many news reports on the Chrysler bankruptcy -- but that does make an appearance in the Treasury's fact sheet -- is that the Canadian government will get a share of the company:

The Governments of Canada and Ontario will together receive 2% of the equity of the new Chrysler. Based on its substantial financial contribution, Canada will also have the right to select one independent director, on the same basis as the four independent directors initially chosen by the U.S.

A quick note about this: One of the arguments that you hear over and over again in favor of saving a company like Chrysler is that it's an iconic part of American industrial history. To pluck one of many, many examples, this morning Obama said: "This is a company that has a particular claim on our American identity."

I think this argument is pretty unappealing on the merits -- you hear the same kind of rhetoric about industry and identity pop up in support of, say, agricultural subsidies -- but I also find the actual pursuit of this weird identity goal to be obviously belied by the facts of the case. Chrysler is going to become part of an Italian car company. And it's doing so with Canadian dollars!

Comments (2)

Diversity May 1, 2009 11:54 AM

Well, for a few years it was part of a "German" car company, wasn't it?

stuartma May 1, 2009 12:24 PM

I agree that the argument is a lame one, but what's *not* lame is the Canadian and Ontario Governments putting cash in. In this unfolding scenario, they darn well *should* be, especially since 2/5ths of Chrysler's hourly workforce is in Canada and the automotive industry in North America is completely integrated across the border. In fact, more people work in the auto biz in Ontario than in Michigan (many of them for parts makers as well as Toyota and Honda, mind you).

It's interesting to note that the Canadian Federal Government is lead by the Conservative Party, and this type of bailout has to be anathema to their free market principals. Canadians, while generally to the left of the US, are far more free-market capitalists than much of Europe, say, or what the US media often portrays. And that's certainly the case for current PM Harper. There's no way that anyone in Canada *wants* any part of this, but given the cards dealt they darn well should be ponying up.