OTTAWA (Reuters) - Canada will not provide financial aid to troubled automakers until they present a solid business plan, Industry Minister Tony Clement said on Tuesday, responding to calls for swift action to support an industry that’s crucial to the country’s industrial economy.
“On this side of the House, we want real, accountable, solid business plans before we spend taxpayers’ money,” Clement told the House of Commons when asked when the Conservative government would aid the struggling auto sector.
Chief executives from the top three Detroit automakers -- General Motors Corp, Chrysler LLC and Ford Motor Co -- have requested emergency aid in Washington and Ottawa to fend off collapse of their businesses due to the economic downturn.
The scale of the job losses from insolvency in one or more of the companies could have a domino effect on other businesses such as parts suppliers, dealerships and transportation companies, having broad repercussions for the North American economy.
The U.S. government has also said automakers must provide more details on their plans for an industry turnaround before any cash is forthcoming.
Canada hopes that any U.S. bailout keeps the closely linked Canadian side of the automotive supply chain in mind.
The premier of Ontario, Dalton McGuinty, cautioned on Tuesday that any aid should not be rushed and would require a careful examination of the companies’ books. Ontario is the center of Canada’s auto industry.
“We’re talking about what could prove to be a very expensive support package and I think one of the things that taxpayers, in particular, want us to do is to be sure that if we do this, that we get it right,” he told reporters in Toronto.
McGuinty said he believed there was a “strong foundation” in the auto industry on which to build, and that North Americans are going to continue to buy “millions and millions” of cars long into the future.
Professor Anthony Faria, an auto industry analyst at the University of Windsor, said the Detroit Three have about 14 to 15 percent of their plant capacity in Canada.
It would therefore make sense for Canada to offer support that amounts to about 15 percent of what the U.S. pledges.
Reporting by Louise Egan and John McCrank; editing by Rob Wilson