Saturday, May 30, 2009

Fiat would 'fully utilize' Chrysler Canada's plants, CEO says

Italian automaker Fiat SpA plans to make full use of Chrysler Canada's plants when it buys a major stake in the ailing North American automaker, CEO Sergio Marchionne said Friday.

Fiat officials have toured Chrysler's assembly lines in southern Ontario and concluded that they're efficient operations that churn out high-quality products, Marchionne said .

"We have a large commitment to fully utilize these assets, and the opportunity is going to be visible relatively quickly about what can be done here," he told reporters after giving a speech in Montreal.

A bankruptcy court in New York is considering a request from Chrysler to approve the sale of the bulk of its assets to Fiat. The deal is scheduled to close June 15.

Chrysler Canada, with more than 10,000 employees, operates vehicle assembly plants in Windsor and Brampton, as well as a parts factory in Toronto.

"I think that if we start working together with the Canadian Auto Workers, I think these plants have got a great future," Marchionne said.

The dual Canadian-Italian citizen said Fiat can offer Chrysler technical expertise on how to produce smaller, more efficient cars.

"We showed up at the right time with the right technology, the right engines and the right transmissions to help Chrysler complete its product range," he said.

"And we're going to benefit from what they do at the upper end of the spectrum," he said.

But as Marchionne was speaking in Montreal, it appeared that a fatal blow was struck to Fiat's bid to acquire GM Europe's operations, which include automakers Opel and Vauxhall.

The acquisition was part of Marchionne's strategy to combine Fiat, Chrysler, Opel and Vauxhall into a car company with the capacity to produce six million cars a year, the threshold he says is necessary for an automaker to survive.

German government Ok's Magna deal

But late Friday, it was announced the German government had approved a plan for a consortium bid led by Canadian-based auto parts company Magna International to acquire GM's Opel unit.

According to the New York Times, under the terms of the deal, GM would retain a 35 per cent stake in the new company, with Russia's Sberbank taking 35 per cent, Magna holding 20 per cent and Opel’s employees controlling the remaining 10 per cent.

The government has been seeking an agreement that will shield Opel from a looming bankruptcy filing by General Motors in the U.S. and extensive restructuring. Opel employs 25,000 people in Germany, nearly half of GM Europe's workforce.

Shares of Fiat, which had been in the running to acquire the operations, fell in the wake of the news.

Fiat said earlier in the day that it would not attend meetings with the government of Germany, citing "unreasonable" funding demands.

GM is widely expected to file for bankruptcy protection in the U.S. on Monday.

Shares of Magna International closed up four cents to $36.20 on the TSX, while falling 11 cents to $32.43 US on the New York Stock Exchange.

With files from The Canadian Press and The Associated Press