Committee of Council Item J3 for March 5, 2014

JVI Report S5 Kcity 'W" Committee of Council ' A standing Committee of the Corporation of the City of Brampton Date: February 27,2014 COMMITTEE OF COUNCIL

File: M25-Auto Industry

Subject: City of Brampton Supports Investment in the Ontario Auto Industry and the Chrysler Brampton Assembly Plant

Contact: Dennis Cutajar, Chief Operating Officer (905-874-2698)

Overview: • The automotive sector in Brampton employs approximately 10,270 people, of which 70% is represented by motor vehicle and parts manufacturing. • The largest employer in this sub-sector is Chrysler Canada's Brampton Assembly Plant located at Williams Parkway and Airport Road. • The Brampton Assembly Plant employs 3,242 (January 2014) on two shifts. The Brampton plant assembles the following models: Dodge Charger, Dodge Challenger, Chrysler 300 and the Lancia Thema. • As has been widely reported, Chrysler Canada continues to be in positive and productive discussions with the Government of Ontario and the Federal Government regarding unprecedented investment plans in their Windsor and Brampton facilities. • The proposed investment in Windsor and Brampton (estimated to be between $3.1 and $3.6 billion) will serve to update the assembly plants, increase research and development capabilities, create and sustain jobs in Ontario. • The auto industry is a vital part of the Ontario economy contributing significant jobs, investment, spin-offs and tax revenues. The industry is among the leading employers and exporters in Canada. • However, the Ontario auto industry continues to face significant competition from jurisdictions, such as the Southern USA, Mexico and Brazil among others, where an increasing amount of production has already shifted. • This report recommends that City Council positively supports and encourages continued discussions by sending a letter to the Prime Minister of Canada, Premier of Ontario and to Chrysler Canada urging senior government to take all appropriate measures to support the automotive industry and related employment in Brampton and Windsor. A draft copy of this letter is attached.

Recommendations:

1. That the report from Dennis Cutajar, Chief Operating Officer, to the Committee of Council meeting of March 5, 2014, re: City of Brampton Supports Investment in the Ontario Auto Industry and the Chrysler Canada Brampton Assembly Plant, be received; and Jfc-2

2. That the Mayor be authorised to submit a letter to the Prime Minister of Canada, Premier of Ontario and the President of Chrysler Canada respectively, expressing Council's positive support of the current discussions between Chrysler and senior government focused on the proposed investments in the Ontario auto industry, namely in the Windsor and Brampton Chrysler assembly plants; and further, that City Council urges senior government and Chrysler to continue to explore and take all appropriate financial and non-financial measures to support the automotive industry and related employment in the Brampton and Windsor communities; and

3. That this letter be copied to the following stakeholders:

a. City Council Members, City of Brampton b. President of the Union Local - CAW Local 1285 (Unifor) c. Minister of Finance, Government of Canada d. Ontario Minister of Economic Development Trade and Employment e. Leader of the Ontario Progressive Conservative Party f. Leader of the Ontario New Democratic Party g. Brampton MPP's and MP's h. Mayor, City of Windsor i. Chairman, Ontario Chamber of Commerce j. Chairman, Brampton Board of Trade k. President, Canadian Manufacturers and Exporters Association

Background:

This report originates from a discussion raised at the Council meeting of February 26, 2014. Staff was directed to prepare a letter in response to current media reports associated with Chrysler Canada's plans to invest in their two major Ontario facilities, Brampton and Windsor.

Current Situation:

It has been widely reported in the media that the owner of Chrysler Canada, Fiat SpA, is interested in investing an unprecedented $3.1- $3.6 billion in its two major assembly plants in Windsor and Brampton, Ontario.

Moreover, it has been reported that Chrysler Canada has requested financial assistance from the Government of Ontario and the Federal Government related to their investment plans in Ontario, and in fact, that positive discussions on this request between the three parties is ongoing. JV2>

Key Facts About the Ontario Auto Industry

Automotive manufacturing is one of the largest sectors of the Ontario economy.

• Ontario is home to five of the world's top automakers. • 350+ innovative parts manufacturers are located in Ontario. • Industry employs 90,000 highly skilled workers who produced 2.5 million vehicles in 2012 - more than any other North American sub-national jurisdiction.

With respect to economic spin-offs, every job in an auto assembly plant creates another five to nine jobs in the regional economy. For example, Chrysler reports that they built 570,000 vehicles in Canada in 2013, directly employs more than 10,000 people and buys more than $3.2 billion worth of goods from Canadian suppliers. In addition, non union and union workers in the automotive industry contribute significantly to the economy in the form of spending on consumer goods and services and associated taxes.

In its budget last week, the federal government added $500 million to an existing program, called: "the Automotive Innovation Fund", established to aid auto investment.

Key Facts about the Auto Industry in Brampton

As can be seen in the following table, the automotive sector in Brampton employs approximately 10,270 people in over 200 business establishments. The majority of employees (7,154) work in the Motor Vehicle and Parts Manufacturing sub-sector.

Total Automotive Sector Businesses Total Employees

Motor Vehicle & Parts Manufacturing 62 7,154

Motor Vehicle & Parts Distribution 41 1,488

Motor Vehicle & Parts Retail 89 1.451

Motor Vehicle Rental & Leasing 24 176

Total 216 10,269

Total Category Businesses Total Employees

Manufacturing 902 35,246 J&-4

The auto industry represents approximately 20% of all manufacturing employment in Brampton, a large contributor to the City and Provincial GDP.

About the Brampton Assembly Plant and Brampton Satellite Stamping Plant

The Brampton Assembly plant is located on approximately 269 acres at 2000 Williams Parkway East, Brampton, Ontario. At 2.95 million square feet (plus a 230,000 sf stamping plant), this facility is among the largest manufacturing centres in the GTA.

This plant assembles the following products: Chrysler 300, Dodge Charger, Dodge Challenger, Lancia Thema. As of January 2014, employment at this facility reached 3,242 (3,063 hourly, 179 salaried) on two shifts.

Plant History1:

The Brampton Assembly Facility was built in 1986 and acquired by Chrysler Corporation with purchase of American Motors Corporation (AMC) in August 1987. The facility began production of LH vehicles (Chrysler Concorde, Dodge Intrepid and Eagle Vision) in June 1992. Production of the next generation Chrysler Concorde and Dodge Intrepid began in September 1997, followed by the Chrysler LHS and 300M in April 1998.

Production of rear-wheel drive vehicles started at the beginning of 2004 with the launch of the Chrysler 300 and Dodge Magnum. Production of the Dodge Charger was launched in early 2005. Dodge Magnum production was discontinued in late 2007. The all-new 2009 Dodge Challenger SRT8 launched production in May 2008, with the Dodge Challenger following in August 2008. An all-new 2011 Dodge Charger and Dodge Challenger SRT with a new 392 cubic-inch engine began production in December 2010. The all-new 2011 Chrysler 300 rolled off the line in January 2011.

At $118 million, this facility had the 5th highest property assessment value (CVA) on Brampton's assessment rolls in 2014. Chrysler is a major contributor to Brampton and Peel's property tax base2.

Corporate Implications:

With approval of this report, staff will prepare letters to the Prime Minister of Canada, Premier of Ontario and President of Chrysler Canada, respectively. This report also recommends that the following key stakeholders receive copies of these letters, they are:

1http://www.chryslercanada.ca/productinfo2013/contents/Press-Releases/00_Chrysler-Canada lnc/CN_2013_Facilities_Brampton.pdf MPAC, City of Brampton Assessment Roll, 2014 J2.-S

Strategic Plan:

The recommendations in this report closely align with Brampton's strategic economic development and fiscal initiatives, namely:

1. Strengthen Brampton's outstanding quality of life by encouraging economic growth, innovation and entrepreneurship that enhance the City's brand and residents' lifestyles. • Attract and Support Knowledge-Based Jobs (Thriving) • Increase Domestic and Foreign Direct Investment (Thriving) • Expand the Inventory of Lifestyle Amenities (Thriving) • Continued Financial Stability (Serving)

Conclusion:

The auto industry is a vital part of the Ontario economy contributing significant jobs, investment, spin-offs and tax revenues. The industry is among the leading employers and exporters in Canada. In support of this sector, the federal government added $500 million (in its budget last week) to an existing program, called: 'the Automotive Innovation Fund', originally established to aid auto investment.

However, the Ontario auto industry continues to face significant competition from jurisdictions such as the Southern USA, Mexico, Brazil and Europe, where an increasing amount of production has already shifted.

City Council urges the Government of Ontario, Government of Canada and Chrysler Canada to continue to work closely to forge an agreement that will guarantee an important investment for an important sector. J3>-4>

The proposed investment in Windsor and Brampton will serve to update the assembly plants, increase research and development capabilities, and create and sustain jobs in Ontario's communities, thereby allowing local government to expand the inventory of lifestyle amenities that Canadians enjoy.

Dennis Cutajar Chief Operating Officer

Appendix 1: Draft Letter J*-"?

APPENDIX 1

DRAFT Letter {Subject to final edit and revisions} Dear { }

On March ##, 2014, Brampton City Council unanimously approved a motion that firmly reaffirms our support for the Ontario auto industry, and specifically endorses the jobs and investment that can be made in our community by Chrysler Canada.

The City of Brampton is proud to host, support and assist a vibrant auto industry, including our second-largest employer, Chrysler Canada. We want to sustain the 3,200 plus jobs at the Brampton Assembly facility, and create new employment as the market warrants additional production growth.

It is our understanding that the proposed investment in Windsor and Brampton will serve to update the assembly plants, increase research and development capabilities, and create and sustain jobs in our communities. This investment will benefit our economy in many ways, and will allow government at all levels to expand the inventory of lifestyle amenities that Canadians enjoy.

This is an important time to realize the investment that Chrysler is proposing. In the face of significant competition from jurisdictions in North America and emerging global locations, City Council is urging Chrysler, the Government of Ontario and the Government of Canada to continue to work closely and forge an agreement that will guarantee an important investment in our vital automotive sector.

The 10,000 workers directly employed in the Brampton automotive industry, and the thousands who are indirectly related to this sector, contribute significantly to our economy, society, families and communities.

Our strategic plan positions Brampton's economy as the top priority for City Council. Our goal is to "Strengthen Brampton's outstanding quality of life by encouraging economic growth, innovation and entrepreneurship that enhance the City's brand and residents' lifestyles".

We are clear in our position. City Council supports current discussions between Chrysler, the Government of Ontario and the Government of Canada focused on private and public investments in the Ontario Auto Industry and, specifically, the proposed Chrysler plans in Brampton and Windsor. Further, we urge you to explore all appropriate financial and non-financial measures that will see an unprecedented multi J2,-?

billion dollar investment realized in this important manufacturing sector and in our communities.

In closing, I wish to thank you for your continued leadership on this important and exciting industrial opportunity.

I would be pleased to meet with you to discuss our position in person.

Yours truly,

Susan Fennell, Mayor, City of Brampton

Copies:

1. City Council Members, City of Brampton 2. President of the Union Local - CAW Local 1285 (Unifor) 3. Minister of Finance, Government of Canada 4. Ontario Minister of Economic Development Trade and Employment 5. Leader of the Ontario Progressive Conservative Party 6. Leader of the Ontario New Democratic Party 7. Brampton MPP's and MP's 8. Mayor, City of Windsor 9. Chairman, Ontario Chamber of Commerce 10. Chairman, Brampton Board of Trade 11. President, Canadian Manufacturers and Exporters Association