Detroit Three automakers seek aid from Canada
Detroit Three automakers submit request for financial aid to Canadian government
December 05, 2008: 07:59 PM EST
NEW YORK (Associated Press) - Ford Motor Co. said Friday it is seeking a 2 billion Canadian dollars ($1.59 billion) standby credit line from the Canadian government, and General Motors Corp. and
Chrysler LLC are seeking undisclosed amounts as well as the Detroit Three struggle with a worsening economy.
Ford of Dearborn, Mich., said it was seeking the credit line _ "to be used only if the current economic crisis worsens" _ but isn't asking for any money up front.
Chrysler, based in Auburn Hills, Mich., wouldn't comment on the amount it was asking for, saying only that the figure was proportional to the $34 billion that the three automakers were asking of the U.S.
Reid Bigland, president and CEO of Chrysler Canada, said in a statement that his company's request was "temporary and fully repayable" and would ensure Chrysler has sufficient funds to complete its restructuring activities during an unprecedented downturn in vehicle sales.
GM, Detroit, said only that it "requires liquidity support" to stabilize its operations, proceed with new product mandates in the Ontario communities of Oshawa, St. Catharines and Ingersoll, and complete the restructuring initiated in November 2005.
"North American economic conditions now make it necessary for us to seek government assistance to sustain our business and supply chain," said GM Canada President Arturo Elias. "We will also work together with all our key stakeholders to review and agree to further necessary changes to our business model."
Neither company provided details about possible impacts on jobs or plant closures, but GM did separately announce plans to temporarily lay off a third shift at its Oshawa car plant as it cuts 2,000 jobs across North America.
Automakers have blamed tight or nonexistent credit, economic woes and a lack of consumer confidence for the slump. They aren't predicting much of a recovery in 2009.
Federal Industry Minister Tony Clement, who had traveled to Detroit and Washington with his Ontario counterpart to speak with the automakers, said the numbers were the first step in figuring out what, if any, aid would be granted.
He has already said there are funds in the last budget to help automakers, despite the turmoil in Ottawa that prompted the Governor General to suspended Parliament until late January.
Earlier Friday, Ontario Economic Development Minister Michael Bryant said he had received the proposal from the three companies, and warned the number was going to be big.
"The numbers are going to seem big to taxpayers because they are big," Bryant said. "Exactly what those numbers are and whether or not they are too large, or in fact meet the needs of the companies, is something that we will get some advice from experts on."
The Ontario government hadn't promised any time commitment, and will examine the numbers further over the weekend, Bryant added.
Premier Dalton McGuinty, who was in Windsor, Ontario, Friday, said it was too early say how much the province would be willing to give the automakers.
The federal and Ontario governments had set a Friday deadline for struggling automakers seeking financial to provide detailed financial information and a restructuring plan for their Canadian operations.
They had asked the Canadian automakers to reveal their production plans, including how they will "ensure" that energy efficient cars are being made in Canada. The automakers were also asked for an analysis of its Ontario pension liability.
All three automakers have pleaded to the American and Canadian governments for substantial financial aid to stave off bankruptcy and avert the loss of hundreds of thousands of jobs.
Ontario, the heartland of the Canada's auto industry, would be the hardest-hit province if one of the Detroit Three automakers filed for bankruptcy _ something that's considered a genuine threat now that the U.S. bailout is on hold.
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Detroit Three automakers seek aid from Canada
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