Canada under pressure as U.S. auto package nears

Tue Dec 9, 2008 4:20pm EST
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By John McCrank

TORONTO (Reuters) - An agreement on a U.S. aid package for the auto sector would turn up the heat on Canada to bring forward its own support plan, Dalton McGuinty, premier of the province of Ontario, which is home to most of Canada's auto industry, said on Tuesday.

"I expect that if Washington comes forward with an interim support package -- a bridge to Obama, as they're calling it -- there will be a heightened pressure on us to respond with an interim package as well," he told reporters.

The White House said it was making progress in negotiations with Congress on a $15 billion rescue package for Ford Motor Co, General Motors Corp, and Chrysler LLC.

It said that while a number of issues were still unresolved, it was possible a plan could be ready on Tuesday or Wednesday.

In Ontario, McGuinty said he remained convinced Canada will have to find a way to support the Detroit Three, the 400,000 jobs related to the auto sector in the province and the C$20 billion ($15.9 billion) a year they bring to the Canadian economy.

The companies are looking for about C$6 billion in loans, loan guarantees and lines of credit in Canada.

They presented restructuring proposals to the Ontario and Canadian governments on Friday. McGuinty said a team of experts was "poring over the proposals... with a fine-toothed comb," and would make recommendations on a plan once that process was finished.

McGuinty refused to comment on a report in the Globe and Mail newspaper that said Chrysler Canada may shift production from two of its plants in Ontario to the United States if it fails to get the C$1.6 billion loan it asked for in Canada. That would eliminate more than 8,000 Canadian jobs, the paper said, citing people who had been briefed on the company's restructuring plan.   Continued...

<p>A General Motors employee inspects Chevrolet Impalas on the production line in Oshawa, Canada August 21, 2006.REUTERS/J.P. Moczulski</p>