Friday, December 19, 2008

Auto bailout greeted with optimism in Canada

Friday, December 19, 2008 | CBC News | http://www.cbc.ca/canada/story/2008/12/19/bailoutreax.html

The mayors of Oshawa and Windsor — two Ontario cities heavily reliant on the auto sector — welcomed Friday's announcement of U.S. support for the troubled Detroit Big Three.

Oshawa Mayor John Gray said the bailout should help to lift some of the uncertainty the Big Three are facing by getting them to a March 31 deadline to ensure their viability.

"We can, at least, get these companies through the hurdle," Gray said.

"Hopefully by then, some of the credit will start to ease up so that buyers buy vehicles," he said.

U.S. President George W. Bush announced Friday morning that the U.S. government is dipping into the massive financial bailout package to offer $17.4 billion US in short-term loans to automakers.

Canada and Ontario could be on the hook for roughly $4 billion in aid to the automakers here based on their pledge to provide 20 per cent of whatever the U.S. government offered.

Windsor Mayor Eddie Francis said that announcement is a strong signal that the U.S. realizes how important the Big Three are to its national economy. Now, he's waiting to hear what kind of support Canadian political leaders will offer.

"There are thousands of jobs spread out through Ontario in various communities that are dependent on Chrysler," Francis said.
'Vested interest'

"Obviously, the city of Windsor has a vested interest with Chrysler, as does Brampton, as do other jurisdictions. You hope that the provincial government will recognize that importance. I am confident that they will."

Prime Minister Stephen Harper, federal Industry Minister Tony Clement and Ontario Premier Dalton McGuinty were not commenting Friday, with Harper and McGuinty slated to comment at 10:30 a.m. ET in Toronto.

An aide to Harper called the announcement "good news," as did a spokesman for Ontario Economic Development Minister Michael Bryant.

Automotive analyst Dennis DesRosiers said the automakers will have to renegotiate contracts with their workers, suppliers and debt-holders.

"Major, major work needs to be redone," he said.

"And, at the end of the day, when [the car companies] do come up with that [restructuring] plan, there probably is a need for quite a bit more government money in North America."

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