TORONTO (Reuters) - The new chief executive of General Motors Corp said on Wednesday the automaker, which is teetering on the edge of bankruptcy, was having constructive talks with governments of Canada and the province of Ontario about future funding support.
The Canadian government echoed the U.S. auto taskforce last week in saying that GM’s restructuring plans did not go far enough to make the company viable and gave it 60 days to reorganize in order to qualify for long-term government aid.
Ottawa did offer GM and Chrysler, which also had its turnaround plan rejected in both Canada and the United States, C$4 billion ($3.2 billion) in bridge financing to help them survive in the short-term.
The companies are seeking up to C$11.5 billion in total loans in Canada due to a steep downturn in global auto sales.
GM has been running off $13.4 billion in emergency U.S. government loans, and is seeking another $16.6 billion.
Fritz Henderson, who took over at GM last week after former CEO Rick Wagoner was ousted as part of conditions set by the U.S. administration, said that one of the issues in Canada concerned the company’s pension plan.
“There are some questions about ... how we handle our underfunded pension situation in Canada, so we are in dialogue ... constructive dialogue and we are going to work with them to bring this matter to resolution,” he told the Canadian Broadcasting Corporation.
Henderson praised the Canadian Auto Workers union for striking a cost saving deal with GM on March 11 that the company said would wipe nearly C$1 billion off its books on costs related to retirees. That comes on top of a reduction of more than C$7 an hour for each of GM’s approximately 10,000 active Canadian unionized employees.
“If I think about the deal we reached with ... the CAW in terms of making us more competitive, addressing legacy costs, basically a commitment on the part of Ken (Lewenza, the union’s president) and his team to achieve cost parity with the competitors here in the U.S.”
Both Ford Motor Co and Chrysler’s Canadian units have said they could not accept a deal that follows the pattern of the GM-CAW deal, because it does not cut labor costs deeply enough for them.
Ford has said it has enough liquidity to survive the downturn in the auto industry without government assistance.
GM produces almost a fifth of its vehicles in Canada and about 85 percent of the cars made in Canada are sold in the United States.
U.S. auto sales were down 37 percent in March, marking 37 months of consecutive declines.
Henderson repeated that the automaker was preparing plans to restructure outside the courts, but that it was also making preparations to restructure with court protection if need be.
“If we need to resort to bankruptcy, we have to do it quickly and there’s no way you could do it quickly without being prepared for it,” he said.
Editing by Ian Geoghegan