Canada’s $4 bn aid package ‘good news’ for auto industry

December 21st, 2008 - 12:07 pm ICT by IANS  

Toronto, Dec 21 (IANS) The $4 billion aid package announced by Canada for its struggling auto industry has been hailed as “good news” by the industry and workers, but Ford Canada said it would not avail of it.While the federal government will contribute $2.7 billion of the $4 billion bailout announced Saturday, the Ontario provincial government has committed $1.3 billion to the package.

Under the package starting Dec 29, General Motors Canada will get loans up to $3 billion and Chrysler Canada $1 billion in three instalments. Auto-parts makers and consumers will also be given access to easy credit. Ford Canada, however, said it would not avail of the package. Instead, it has sought a stand-by line of credit to cope with any future crisis.

Since Canadian plants of GM, Chrysler and Ford account for 20 percent of their North American output, the package is about 20 percent of the $17 billion US bailout announced Friday.

Announcing the package, Prime Minister Stephen Harper made it abundantly clear that it was not a “blank cheque” for the auto industry that will have to work with unions to restructure their operations.

“We are doing this with the knowledge that the automakers must change the way they are doing business in a very serious way and must bring their products on their costs into line with the market place,” he said.

Harper said the government has stepped in as the failure of the auto industry, which employs more than 400,000 people, would have a ripple effect on the economy.

Canadian Auto Workers (CAW) president Ken Lewenza welcomed the move and said: “This will ensure that the Canadian industry is protected and the numerous investments governments have made over the years will continue to benefit our communities. This is a very sound decision on the part of both governments.”

Ford Canada said it will not avail of the aid package. Instead, it has sought a stand-by line of credit to cope with any future crisis.

Hailing the package, Ford Canada said: “We are well on our way to transforming our company and do not need immediate access to government loans. Instead, we have asked the government for a ’stand-by’ line of credit to be used only if the current economic crisis worsens.

“The auto industry is vital to the economy. In fact, one in seven jobs in Canada is dependent upon the auto sector. Canadian consumers deserve access to affordable loans and leases when shopping for a new vehicle as more than one million Canadian vehicle buyers rely on financing each year.

The auto major added: “There is still much that needs to be done. We look forward to continuing to work with the government on initiatives that will provide long-term, sustainable growth for Canada’s auto industry.”

Tags: , , , , , , , , ,

Posted in World |