TORONTO—U.S. President-elect Barack Obama’s support for an auto industry bailout linked to repatriating jobs from other countries could prompt Canada’s Conservative government into putting up its own bailout package.
Canada’s auto industry, located almost entirely in the province of Ontario, is the country’s largest manufacturing sector and employs almost half a million people, most of them in plants for the “Big Three” automakers—General Motors, Ford, and Chrysler.
While the ruling Conservative government initially balked at the idea of an auto sector bailout, recent statements from top government officials indicate that could change.
Federal Finance Minister Jim Flaherty has told auto manufacturers that they must have a solid plan for their future survival if they want government money. That plan would include moving toward more fuel-efficient and technologically advanced hybrids.
“Nobody wants to see taxpayers’ money taken—and then, in effect, wasted—where a company is not going to survive,” Flaherty recently told reporters.
Last Thursday, Flaherty said Canada and the United States needed to work together to help the ailing industry. To date, no formal discussions have been held.
The “Big Three” automakers are facing a massive cash shortage as consumer spending dwindles and orders dry up. They’ve already asked the U.S. Senate for $25 billion to keep operations running, a move some top Republicans say will only sustain them for the next six months.
Similar skepticism exists in Canada.
In 2004, the Canadian government gave Ford $100 million to build a factory only to see Ford shut down 14 other plants across North America and announce up to 2,300 job cuts in Canada two years later.
Some editorials in Canadian newspapers are calling on the government to put up funds for the industry in light of its huge impact on the economy. In 2006, industry shipments reached $59.8 billion in vehicles and $28.5 billion in parts.
Others suggest that giving money to businesses making products people don’t want to buy just doesn’t make sense.
But the auto manufacturers have found one strong ally in the form of Ontario Premier Dalton McGuinty, who met with industry officials last Friday.
The three auto makers have asked both the Ontario provincial government and Canada’s federal government for loan guarantees and low-interest loans.
McGuinty has issued an ultimatum similar to Obama’s, saying his government won’t lend assistance without guarantees that jobs will stay in Canada.
With Obama linking assistance to bringing auto jobs back into the United States and Canadian officials linking assistance to keeping jobs in Canada, the future of Canada’s auto industry may hinge on who comes to the table with the cash first.
Canada is the ninth largest vehicle producer in the world and accounts for 16 percent of all vehicles made in North America.
Canada’s auto industry, located almost entirely in the province of Ontario, is the country’s largest manufacturing sector and employs almost half a million people, most of them in plants for the “Big Three” automakers—General Motors, Ford, and Chrysler.
While the ruling Conservative government initially balked at the idea of an auto sector bailout, recent statements from top government officials indicate that could change.
Federal Finance Minister Jim Flaherty has told auto manufacturers that they must have a solid plan for their future survival if they want government money. That plan would include moving toward more fuel-efficient and technologically advanced hybrids.
“Nobody wants to see taxpayers’ money taken—and then, in effect, wasted—where a company is not going to survive,” Flaherty recently told reporters.
Last Thursday, Flaherty said Canada and the United States needed to work together to help the ailing industry. To date, no formal discussions have been held.
The “Big Three” automakers are facing a massive cash shortage as consumer spending dwindles and orders dry up. They’ve already asked the U.S. Senate for $25 billion to keep operations running, a move some top Republicans say will only sustain them for the next six months.
Similar skepticism exists in Canada.
In 2004, the Canadian government gave Ford $100 million to build a factory only to see Ford shut down 14 other plants across North America and announce up to 2,300 job cuts in Canada two years later.
Some editorials in Canadian newspapers are calling on the government to put up funds for the industry in light of its huge impact on the economy. In 2006, industry shipments reached $59.8 billion in vehicles and $28.5 billion in parts.
Others suggest that giving money to businesses making products people don’t want to buy just doesn’t make sense.
But the auto manufacturers have found one strong ally in the form of Ontario Premier Dalton McGuinty, who met with industry officials last Friday.
The three auto makers have asked both the Ontario provincial government and Canada’s federal government for loan guarantees and low-interest loans.
McGuinty has issued an ultimatum similar to Obama’s, saying his government won’t lend assistance without guarantees that jobs will stay in Canada.
With Obama linking assistance to bringing auto jobs back into the United States and Canadian officials linking assistance to keeping jobs in Canada, the future of Canada’s auto industry may hinge on who comes to the table with the cash first.
Canada is the ninth largest vehicle producer in the world and accounts for 16 percent of all vehicles made in North America.
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