KAREN HOWLETT and GREG KEENAN
WOODSTOCK, Ont. — Globe and Mail Update Last updated on Tuesday, Mar. 31, 2009 09:23PM EDT
The head of Chrysler Canada Inc. warned Thursday that its operations will disappear in a “slow burn” if it doesn't receive an estimated $1.6-billion in financial aid immediately from Ottawa and Ontario.
Reid Bigland, Chrysler's president, would not reveal the exact amount of money the auto maker is seeking, but he said the Canadian arm of Chrysler LLC needs a proportional share of what its parent company has asked from Washington.
Chrysler LLC asked for $7-billion (U.S.). The assistance for its Canadian arm should be based on the company's production here, which represents about 23 per cent of Chrysler's total North American output, Mr. Bigland told reporters during a telephone briefing from Windsor, Ont., Thursday.
Without the money “it could be a slow burn of our footprint here,” he said, referring to assembly plants in Windsor and Brampton, Ont., that employ about 8,000 Canadians. “We need the money now.”
The Canadian units of the Detroit Three auto makers will present plans to the federal and Ontario governments Friday that will outline how much money they need, what they plan to do with it and the terms for paying it back.
But their request for funding comes amid high drama in Ottawa. Prime Minister Stephen Harper obtained Governor-General Michaëlle Jean's consent to temporarily shut down Parliament Thursday, a move that allows him to avoid a confidence vote next week that he was expected to lose.
However, Federal Industry Minister Tony Clement said Thursday the government can still make decisions about providing funding for the struggling auto sector even though Parliament is shut down until Jan. 26. While he acknowledged the government will not be able to touch any of the funding that will be in next year's budget until Parliament approves it, he said the government can still act within the “confines” of this year's budget.
“We still have spending decisions that we can and should make,” Mr. Clement said. “And at the same time, certainly it is possible for us to signal our intentions.”
Ontario Premier Dalton McGuinty warned Mr. Harper that he cannot allow the political turmoil in Ottawa to interfere with efforts to save the auto companies.
“We will not allow the suspension of Parliament in Ottawa to act as any kind of an excuse to slow down our determined drive to lend support to the auto sector,” Mr. McGuinty told reporters.
The politicians made their comments at the official opening of a new Toyota Motor Corp. assembly plant in Woodstock, Ont., one of the few rays of sunshine amid the storm clouds swirling over the auto industry.
But even mighty Toyota, which has been vying with General Motors Corp. for world automotive leadership, has been scarred by the slump in sales to lows not seen since the early 1980s.
The new Woodstock operation will start out with a single shift of workers assembling RAV4 sport utility vehicles, instead of the original plan for two shifts.
But the new plant is part of a long-term commitment to North America and a belief that the slump is temporary, senior company officials said at a ceremony marking the official opening.
“Certainly this is a challenging time for all auto makers,” said Katsuaki Watanabe, Toyota's president. But “North America is undoubtedly a growth market,” he said. More than 80 per cent of the vehicles made at the plant will be exported to the United States, where Toyota sales plunged 32 per cent last month.
Mr. Clement reiterated Thursday that any government aid will come with strings attached. When taxpayers' money is involved, he said, “you do not open the window and start pouring money out the window until we see the plan.”
Mr. Bigland said if the governments turn down his request, Chrysler's Canadian assembly plants would not be competitive with those in other jurisdictions and would lose out when investments for new vehicles were allocated if governments in this country don't help out.
“Any money we receive from Canadian governments will stay in Canada,” he said.
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