Canadian auto workers and government officials have received some bad news writes Bill Cawthon. Hopes that DaimlerChrysler would consider building a new van at the company’s Pillette Road assembly plant in Windsor, Ontario, were dashed yesterday.

DaimlerChrysler announced that Canada is out of the running for consideration as the site for assembling the North American version of the Mercedes-Benz Sprinter. Instead, the company will build a new $500 million facility in Georgia or one of the Carolinas.

The Pillette Road plant builds the Dodge B-Series full-size van, which will go out of production in 2003. When that occurs, the Sprinter, currently sold under the Freightliner name in the U.S., will begin carrying a Dodge nameplate. Plans call for the Freightliner-badged version to be dropped by 2006.

The new assembly plant is expected to produce about 1,000 new jobs when it reaches full production capacity in 2006. Plans call for the facility to build about 100,000 Dodge Sprinters each year.

The company said NAFTA regulations would have made it impossible for the Sprinter van to enjoy duty-free entry into the United States. Under NAFTA, 62% of a vehicle’s total content must come from North America to escape the penalty. Since Sprinters are assembled from parts manufactured in Germany, they have to be built in the United States to avoid the content issue. Current duties on imported commercial vans run about 25%.

An equally important reason, according to some industry sources, is the fact that states in the southern United States are offering huge incentive packages, including financial help with infrastructure and employee training, among other things. Like rebates on new cars and trucks, manufacturers have become addicted to incentives, which can run into the hundreds of millions of dollars. Even Canada’s significantly lower cost of production was not enough to offset the absence of government largesse. DaimlerChrysler was looking for a package in the neighborhood of $200 million.

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