Canada report sees huge job loss if Detroit 3 fail

Tue Dec 16, 2008 6:16pm EST
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By John McCrank

TORONTO (Reuters) - A collapse of the Detroit Three automakers would put nearly 600,000 Canadians out of work within five years, most of them in Ontario, as the impact ripples through the entire economy, a report released on Tuesday said.

The study, commissioned by the Ontario Manufacturing Council, warned that a collapse of General Motors Corp, Ford Motor Co and Chrysler Corp would spread across the country, hitting creditors, suppliers, parts manufacturers and dealerships.

The report came as the Canadian and U.S. governments debate plans for a possible rescue of the Big Three.

Prime Minister Stephen Harper called President George W. Bush on Saturday to say that if the United States provided aid, Canada would provide its own aid of 20 percent, a U.S. diplomat said on Tuesday. That could amount to several billion dollars from Ottawa.

The manufacturing council, which advises the Ontario government, said that if the Detroit Three were to cease production, 323,000 Canadians would lose their jobs immediately, including 281,800 in Ontario. That would rise to 582,000 nationally and 517,000 in the province by 2014.

"This report says that Canada is better off providing life support to GM and Chrysler because the demise of (the) auto (industry) in Canada is the economic equivalent of a nuclear freeze, with catastrophic effects that would knock us into a deep recession," said Michael Bryant, Ontario's economic development minister.

Under an alternative scenario, if the U.S.-based automakers were to cut production by 50 percent, at least 157,000 jobs would be lost right away, 141,000 of them in Ontario, the study said. By 2014, job losses would rise to 296,000 nationally, including 269,000 in Ontario.