Canada's muted reaction to auto crisis spurs worry
TORONTO - Unless a bold plan to rescue Canada's auto sector is in place soon, many communities in the manufacturing heartland of Ontario may find themselves staring into the abyss, so dependent are they on the auto industry.
Work on a package started in earnest last week when the Canadian subsidiaries of the Detroit Three automakers - Ford Motor Co , General Motors Corp , and Chrysler - delivered restructuring plans and requests for funds to the federal government and the Ontario provincial government.
Government officials said they will decide what, if any, aid to give the companies after the documents are reviewed thoroughly.
While it is uncertain how long it will take them to make a final decision, most signs point to delay. The government has suspended Parliament until late January, the parties involved in the process have communicated only sporadically, and public debate has been limited.
When an aid package is finally approved, it could prove too little, too late, industry and public officials say.
"The lack of clear communication about where Canada stands in this suggests that there is no clarity," said Richard Cooper, vice-president of Canadian operations at consultant JD Power and Associates. "The concern that I would have is that this thing is going to be out of our control when it is decided."
In the United States, lawmakers appeared set on Wednesday to vote on a preliminary $15 billion (S$22.53 billion) aid package to carry U.S. automakers through until late March. Any U.S. aid would be have to be spent in that country and would come with U.S. job guarantees.
The companies' Canadian operations are seeking around C$6 billion in loans and credit lines from Canada and Ontario.
"Canada is waiting to see if this preliminary package is going to pass in the U.S.," said Anthony Faria, an auto industry analyst and professor at the University of Windsor.
"The industry minister has previously said ... that they wanted to wait until they saw how much was made available in the U.S. and what sort of strings were attached."
Windsor, Ontario, a city that lies across the river from Detroit, is particularly vulnerable to the fate of the Canadian auto industry, and its mayor took a desperate tone in a letter he sent on Tuesday to Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty.
"At this stage, a refusal by the federal and provincial government to act is nothing less than a decision to allow the death of a community," the mayor, Eddie Francis, wrote in the letter, a copy of which was obtained by Reuters. "The reality is that without immediate action... this country and this province will lose a city."
The auto companies have been sideswiped by the U.S. credit and liquidity crunch. Nearly nine of every 10 cars built in Canada are sold in the United States.
Recent media reports have said Windsor could lose its Chrysler minivan plant if Chrysler Canada cannot secure about C$1.6 billion in loans it is seeking from Canada and Ontario.
"There's no question that would be a death blow to the city of Windsor," said the University of Windsor's Faria.
Windsor, with a population of about 216,000, is one of many Ontario cities reeling from auto sector cuts. It has the highest unemployment rate of any major urban center in Canada, at 10.1 percent. The national jobless rate is 6.2 percent.
Chrysler employs 5,340 people in Windsor-Essex county, while Ford employs 1,850 and GM 1,240. For every auto manufacturing job, more than seven other jobs are directly and indirectly dependent on the industry, Francis said.
An industry insider said the auto manufacturers have been meeting behind the scenes with officials from the Ontario and Canadian governments regarding their plans.
Mary Gauthier, a Chrysler Canada spokeswoman, confirmed Chrysler Canada is meeting with representatives from the Canadian government "to answer questions they have regarding our request for assistance." She said she could not give any more details on the meeting.
A spokesman at the Prime Minister's Office could not confirm, and officials at the industry and finance ministries said they were unaware of any meetings.