TORONTO STAR: Carmakers seek 'proportional' aid; Canadian GM executive makes pitch for loans from Ottawa
November 19th, 2008 - 8:55pm
PUBLICATION: The Toronto Star
BYLINE: Robert Benzie and Tony Van Alphen Richard Brennan
Carmakers seek 'proportional' aid; Canadian GM executive makes pitch for loans from Ottawa that could range up to $3.5 billion
General Motors, Chrysler and Ford are seeking aid from the Canadian government that is "proportional" to what the U.S. will offer, a top executive at GM's Canadian unit says.
In the U.S., the automakers are seeking about $25 billion (U.S.) in loans, so Canadian assistance would be in the range of about $2.5 billion to $3.5 billion in view of their share of North American auto sales and production.
"We think Canada should signal some form of proportional support," David Paterson, vice-president of corporate and environmental affairs at General Motors of Canada Ltd., told the Star's editorial board yesterday.
Paterson said GM, Chrysler and Ford have not asked for a specific amount of aid but they are seeking loan guarantees or the same credit ratings as governments so the companies can gain easier access to funds.
"What we have talked about is the notion of what was done for Chrysler, where the government credit rating was provided so that a bank would be able to justify loans that are repayable," he said, referring to the rescue package for Chrysler in the late 1970s.
"In the United States, they're talking about 5 per cent loans in the first couple of years, then raising up to a higher per cent - 7 (per cent), 9 per cent, so you have an incentive to pay it back faster, totally repayable."
As federal and provincial ministers prepared to visit Detroit today to discuss aid to the automakers, Ontario Premier Dalton McGuinty said any Canadian bailout should complement - not undermine - U.S. rescue efforts.
Emphasizing that the provincial government is working closely with Prime Minister Stephen Harper, McGuinty said he hopes a domestic aid package dovetails with what eventually emerges from Washington.
"We would prefer to move, if it's possible, in lockstep with the U.S.," the premier told reporters.
"We both understand it's a very important issue not just to those families that are directly supported by the auto sector, but for the Ontario and, more broadly speaking, Canadian economies."
Federal Industry Minister Tony Clement and provincial Economic Development Minister Michael Bryant will be with the automakers in Detroit today and other officials in Washington tomorrow.
"I am aware of the situation and I don't have the luxury of waiting around forever (to make a decision)," Clement said in Ottawa.
At Queen's Park, Bryant said he and his federal counterpart are on a "fact- finding mission" to see how much General Motors, Ford, and Chrysler need to survive - and try to calculate what kind of bailout Washington is planning.
"It is to determine on the ground the state of any potential U.S. government action and, as best possible, the state of the finances of the Detroit Three," he said, adding the failure of the auto giants would be calamitous to Canada.
"This isn't about Bay Street or Wall Street. It's about Main Street and the side streets connected to it. This is about hundreds of thousands of workers and a tremendous amount of revenue that's used to fuel our economy and the work that the government does."
Clement warned that unions also must be prepared to do their part to keep the industry afloat.
"We are examining all of the options and part of the purpose of my information gathering over the next few days is to exactly examine what is occurring in the U.S., what is the lay of the land. We know that legislators in the U.S. are very clear in what they want to do," he said.
But Canadian Auto Workers president Ken Lewenza said Ottawa has not even responded to requests for a meeting from the union, which suggests it doesn't understand the urgency of the crisis.
"We have sent letters to Harper and the industry minister and others for a meeting but haven't got there yet," he said in an interview.
"Is he (Clement) responding to the CAW? No," said Lewenza, who added that he's been in constant contact with Bryant.
The CAW president, expressing concern that a bailout may be delayed until the inauguration of U.S. President-elect Barack Obama, noted that some of the Big Three might not survive that long.
"The urgency is that one or all of these companies won't survive the cash crisis until Jan. 20 and beyond," he said.
NDP MP Brian Masse (Windsor West) said the federal government appears prepared to let the auto industry die for ideological reasons.
"We don't have time to wait. We have to move forward. If we are in isolation when the United States comes forward with a package ... they will secure the entire North American market and we will be left out in the cold," he said.