January 19, 2009 / 1:55 PM / 9 years ago

Canada seeks quicker deployment of automotive aid

TORONTO (Reuters) - The Canadian arms of General Motors and Chrysler should wrap up talks with Ottawa quickly on their restructuring plans because a “drop dead” date for agreeing on terms for government aid is fast approaching, Industry Minister Tony Clement said on Monday.

<p>Toyota's cars are reflected on the hood of a Toyota van at its showroom in Tokyo January 16, 2009. REUTERS/Kim Kyung-Hoon</p>

Clement said that February 20 is the deadline for the automakers to come up with a comprehensive plan that would allow them to get government aid.

“We’re not going to be rushed into things, if we don’t feel that taxpayers’ interests are being protected. But one would have thought that we would have been at the conclusion at this phase by now. We are not,” Clement told reporters following a breakfast speech in Toronto.

“I guess I am signaling to them: let’s get a move on. Let’s finish our discussion and dialogue and if you need the money, let’s flow the money. If you don’t need the money that’s fine too, we understand that.”

Canada and the Ontario government unveiled an aid package last month that provided C$4 billion ($3.2 billion) in emergency loans to the Canadian arms of the ailing automakers to keep them operating while they restructure.

However, General Motors of Canada and Chrysler Canada have not yet taken advantage of the funds. Ford Motor Co of Canada has not asked for assistance.

The package, announced on December 20, came one day after the U.S. government unveiled a $17.4 billion package to prop up Detroit’s ailing auto industry.

Clement said that the Canadian aid issue is complicated, but said in his speech that he was “disappointed” by the slowness of the process.

“In fairness to them, this is a rather complicated bi-national situation that involves concurrent discussion with both the U.S. Treasury Department and Congress, as well as the Canadian government and the Ontario government,” he told reporters.

“My point of view is that where there is a will there is a way, but let’s start to make sure that the Canadian branch of this integrated industry has a competitive plan for the future.”

Jim Stanford, an economist at the Canadian Auto Workers union, said he was not surprised by the automakers’ reluctance to jump at the funding, noting that the companies must first digest the plans being made by their U.S. parents.

“Clearly the future of the companies depends primarily on what happens from the U.S. government, and that’s their first priority,” he said.

“The fact that the federal and Ontario governments indicated upfront that they will be a proportional part of that solution was crucial, so that the companies, as they are planning their restructuring, are ensuring that they keep a proportional footprint in Canada. I am not surprised that the details of the Canadian arrangement have not been plugged in yet.”

Clement said it is vital that the Canadian automotive sector become more competitive to ensure the industry can survive the slowdown in the global economy and currency fluctuations.

“I‘m not saying that there isn’t going to be some discussion about this, but I would rather let the automakers have that discussion and come up with something reasonable, that is flexible enough that if our dollar changes direction one way or the other we can still remain competitive,” he said.

Clement said more auto-sector announcements will be made next week in connection with the January 27 release of the federal government’s budget.

($1=$1.26 Canadian)

Reporting by Scott Anderson; editing by Peter Galloway

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