Pressure mounts for Canada to help US automakers



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Pressure is mounting on Canada`s government to help bail out the struggling US Big Three automakers that have operations in Ontario province, as Washington considers a major rescue.

Industry Minister Tony Clement met with executives of Ford, Chrysler and General Motors in Detroit on Wednesday.

The following day, Clement was to discuss the Big Three`s hopes for help with officials in Washington, to `gather information on options being considered by the US government to assist the automotive sector.`

General Motors, Chrysler and Ford employ 40,000 Canadians at its assembly plants in Ontario, and are responsible for an estimated 300,000 direct and indirect jobs in the country, including parts suppliers.

Last year, Ontario car makers built some 2.5 million vehicles in Canada, more than any US state, including Michigan.

And the Big Three`s failure, according to the head of the Canadian Auto Workers` union, would be a `devastating blow` to the Canadian economy, to consumers and to its members.

Clement has not ruled out helping the auto manufacturing sector, saying Washington and Ottawa could partner on a joint North American strategy to help the Big Three avoid insolvency.

But he also reminded journalists that Prime Minister Stephen Harper, Ontario Premier Dalton McGuinty and US president-elect Barack Obama said `this isn`t about getting a shovelful of money and tossing it out the window and hoping it has some impact.

`It isn`t about short-term bailouts. It`s about what is the long-term strategy for the North American car industry.`

`We can make a quick decision and it might be the wrong decision,` he added. `Making the right decision ... is in the best interests of taxpayers as well as our economy.`

Ontario Minister of Economic Development Michael Bryant, who joined Clement on the US trip, underscored the need for swift action.

`Canada ought to be moving prior to any US package ... to avoid being a minority shareholder in setting the terms and also to ensure that we are not locked into a proportion that is unrealistic for Canada,` he said.

On Tuesday, the Big Three pleaded with the US Congress for a 25-billion dollar rescue package, to guarantee their survival amid slowing sales and a global financial crisis.

Their Canadian units are also asking Ottawa and Ontario for financial help `proportional` to the size of a US government bailout, said David Paterson, vice-president of General Motors of Canada.

Based on the requested US rescue package, and the fact Canada produces 14 percent of all vehicles made in North America, Canadian government aid would amount to 3.5 billion dollars.

`The trick will be to provide the right help to keep these critical companies afloat without getting stuck in a corporate welfare quagmire,` commented the daily Globe and Mail in an editorial under the headline `Time to feed the dinosaurs.`

Obama has signaled he is willing to help the Detroit car makers, but also `clearly stated he wants government aid to be linked to repatriating jobs from other countries,` the editorial said. `These are worrisome words for Ontario.`

In exchange for US aid, foreign assembly plants would thus be closed ahead of US operations in a likely restructuring, said Christian Navarre, an auto industry specialist at the University of Ottawa.

Without Canadian aid, plant closures in Canada are a real possibility, he told AFP, since 90 percent of vehicles assembled in Canada and 65 percent of Canadian-made automotive parts are exported to the United States.

Statistics Canada said exports of Ford, Chrysler and GM vehicles and parts peaked at 51.0 billion Canadian dollars (41.4 billion US) in 1999, before falling by almost one-third since then.

The auto industry as a whole now accounts for about three percent of Canada`s gross domestic product, said Jim Stanford, CAW chief economist.

Whatever the outcome of bailout talks, closing Canadian assembly plants would be bad for business, Navarre said, noting that GM plants in Ontario, for example, are more productive than their US counterparts.



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