Canada Gives Car Makers Loans

Saving GM, Chrysler and Ford isn't just an American issue. Because of the geography of the Great Lakes region and because of US-Canadian history, a great many jobs in Canada depend on those firms as well as a great many in the US. One day after President Bush announced he was tapping the financial industry bailout funds to help Detroit, Canada's government announced a smaller but quite similar loan package.

According to CTV, “Ontario will contribute about C$1.3 billion to the package and Ottawa will provide C$2.7 billion . . . . The aid package will also give loan access to auto-parts manufacturers and other businesses that are part of the auto supply industry and give additional credit to consumers.” The Big 3 do about 20% of their business in Canada, and the package is about 20% the size of the US loans.

Prime Minister Stephen Harper said, “This is a huge problem that faces the Ontario economy and the Canadian economy by extension and it is critical that we work together.” Ontario's premier Dalton McGuinty echoed these sentiments saying, “These are extraordinary circumstances that require extraordinary measures.”

Like the US counterpart, Canadian Auto Workers president Ken Lewenza is in favor of the loans. “I think the commitment of maintaining the production share in Canada at the existing level is a fairly good commitment," Mr. Lewenza told the press. “As long as we maintain our share in the Canadian market, which is part of this loan, I think we'll be part of the future investment and will continue to work with the companies."

GM's Canadian spokesman David Patterson seemed to have a similar view of the situation, 'Our plans for Canada right at the moment are to see us continue on at that [20%] level, and this type of support, as we work out the details, will give us the ability to continue on roughly at that level.”

And as with the US loans, the Canadian funding is only designed to kick the can down the road until the Obama administration has the constitutional power to address the issue. Auto industry analyst Dennis DesRosiers told CTV, “It probably only buys them three months or four months where they can get their ducks in order ... and hopefully come up with a plan to get everything straightened out so that they can survive.” At the same time he warned that the unions will have to make further concessions, “If they don't make serious concessions, then GM, Ford and Chrysler will continue to lose market share and they'll lose their jobs anyway.”

Eddie Francis, the Mayor of Windsor, Ontario, summed it up, “There will be job losses . . . it's something that is going to happen." All the same, he concluded that losing jobs is “better than not having an industry at all.”

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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