Abstract: The Political Economy of a Bail-Out: Canada, the Chrysler Corporation, and the North American Auto Industry, 1975-1985

Dimitry Anastaskis


This paper will contextualize and root the Chrysler Corporation's near death and bail-out in 1979-1981 within the larger story of the evolving North American political economy in this period. The paper will address a number of aspects of this evolution. First, the paper will briefly discuss the causes of Chrysler's near-death in 1979-80 as a way of providing some background to the issue and to give a context of the challenges facing the North American industry at the time. This will include a synopsis of the 1965 Auto Pact, the duty-free automotive trade regime which governed Chrysler's operations in North America and was a precursor to the 1989 Canada-US free trade agreement. Second, it will address the debate surrounding the bail-out in both Canada and the United States, and show the differing attitudes toward state intervention in the auto industry: Canadians were far more willing to assist Chrysler during its crisis, while many American commentators and stakeholders felt the company should be left to the dictates of the market. Third, it will examine the Canadian state's role in the Chrysler bail-out. In doing so, it will only touch upon the actual details of the main bail-out story. Finally, the paper will discuss the implications of the "new" Chrysler for the North American auto industry, in particular with regard to the Canadian scene. In doing so, the paper will argue that ultimately the Chrysler bail-out was actually beneficial for the operation of the Canadian side of the corporation, and for the wider Canadian industry.