GM, Chrysler ask for up to $8 billion aid from Canada

Fri Feb 20, 2009 6:51pm EST
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By Wojtek Dabrowski

TORONTO (Reuters) - The Canadian units of General Motors Corp and Chrysler are seeking as much as C$8 billion ($6.4 billion) in aid from the Canadian and Ontario governments as they fight to survive an industry-wide crisis, officials said on Friday.

The request represents a doubling of the aid that the companies said they need. The governments had pledged C$4 billion in support at the end of last year.

GM's plan, outlined on its website, would require the company close no more Canadian plants at this time, but did not provide specific details on any further planned job cuts.

But the plan said GM Canada's workforce would shrink to 7,000 by 2010 from 20,000 in 2005 as a result of plant closures that have already been announced.

GM also called for "changes sufficient to achieve legacy cost reductions and align active worker wages and benefits to benchmark levels."

It proposed a 10 percent cut in executive salaries, and reduced pay and benefits for salaried employees.

Significantly, the plan would also keep 17 to 20 percent of GM's production in Canada over the next five years, the company said, a feature the Canadian government signaled was essential.

GM Canada refrained from providing a dollar amount on its proposal, but Federal Industry Minister Tony Clement said GM is asking for C$6 billion ($4.8 billion) to C$7 billion in repayable loans.   Continued...

<p>A Canadian flag flies from the window of a General Motors vehicle at a car dealership in Toronto December 12, 2008. REUTERS/Mike Cassese</p>