December 12, 2008 / 8:53 PM / in 9 years

Canada yet to do due diligence on autos: minister

OTTAWA (Reuters) - Canada is closely watching the fate of the U.S. auto rescue package but will not be able to advance an immediate aid plan of its own because of its desire to study company plans in detail, Industry Minister Tony Clement said on Friday.

“We have some due diligence we’ve got to do here,” Clement told a business audience in Brampton, Ontario, near Toronto.

He said getting the restructuring plans from the Canadian subsidiaries of the Detroit Three automakers last Friday was only stage one. The second stage is going into their data centers with auditors to “drill down in great detail” on their long-term plans.

“It will take more than a couple of days. We started 48 hours ago,” the minister said.

Unlike in the United States, there is little legislative resistance to a Canadian bailout of the auto industry, even though it goes against the grain of the Conservative government.

However, Ottawa was almost certain to refrain from pouring money into the industry if the United States was going to let the companies go belly up.

“It is difficult to imagine a solution in Canada without a solution in the United States,” Clement said.

Canadian Auto Workers President Ken Lewenza urged Prime Minister Stephen Harper to proactively announce a Canadian package conditional on U.S. aid, which could then put pressure on the United States.

“We’re pleading, in particular with Mr Harper, to move and move swiftly in support of the Canadian auto industry and in support of our existing facilities,” he told a union news conference in Toronto.

It was uncertain how much the CAW might make concessions. A dispute over concessions from the United Auto Workers was one reason an aid package failed in the U.S. Senate.

Lewenza said “we’re part of the solution” but he said the problem was not unionized labor.

“UAW members and CAW members cannot be scapegoats as a result of this global financial crisis. The reality is, we could work for nothing and it wouldn’t improve the global financial crisis we’re experiencing,” he said.

Brian Masse, an opposition member of Parliament from the leftist New Democratic Party, described the demand for union concessions “a red herring” and said it would not make sense to try to provide general economic stimulus and then suppress wages.

“When they bailed out the banks ... they never asked for wage concessions,” said Masse, who comes from the Ontario auto industry city of Windsor.

Clement said he had a frank discussion with Lewenza this week and said that even if Canada’s industry was among the most productive in the world it also needed to be competitive. He said, without giving details, the signal from Lewenza was that he was prepared to work with the management and government.

Clement’s focus is to ensure that in any restructured auto industry Canada continues to have about 20 percent of the capacity of the North American market even if that market is down from its height.

An aide, speaking on condition of anonymity, said Clement was looking at requests not only from the Big Three but also from auto parts makers like Linamar and Magna International.

The minister said Ottawa was not lagging Washington in analyzing the industry. He said the United States was only working on an immediate rescue plan to be followed by a long-term plan in 2009, whereas Canada was working on a long-term package now.

No dollar figures have been determined, but there have been reports the Canadian sector is looking for C$6 billion ($4.8 billion) in loans, loan guarantees and lines of credit.

On Friday, the U.S. Senate rejected a $14 billion bailout plan, though the White House said it might dip into the $700 billion U.S. bank recovery fund to stave off an auto industry collapse.

($1=$1.24 Canadian)

Additional reporting by John McCrank in Toronto

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