AP
Canada offers $3.29 billion auto bailout
Saturday December 20, 1:14 pm ET
By Charmaine Noronha, Associated Press Writer
Canada offers $3.29 billion bailout to Canadian subsidiaries of US automakers


TORONTO (AP) -- The federal and Ontario governments will provide the Canadian subsidiaries of the Detroit Three automakers with $3.29 billion in emergency loans, the prime minister said Saturday.

The announcement follows a pledge Friday by President George W. Bush to offer $17.4 billion in emergency loans to General Motors Corp. and Chrysler LLC.

Prime Minister Stephen Harper said Canada's pledge, the equivalent of 20 percent of the U.S. aid package, will help keep the Canadian plants operating while they restructure their businesses to retain one of the country's most important sectors.

"We cannot afford, in the United States or Canada, the catastrophic short-term collapse of the Big Three automakers. The U.S. has signaled that they are not going to allow these companies to fail, and we will do our share of the North American package to see that this doesn't happen either," said Harper speaking at a news conference in Toronto.

Canada's automotive industry represents 14 percent of the country's manufacturing output, 23 percent of manufactured exports, and directly employs more than 150,000 Canadians. It is the country's largest industry within the manufacturing sector.

Ontario has agree to provide 1.3 billion Canadian dollars ($1.2 billion) of the $3.29 billion since the province alone employs about 400,000 auto sector workers -- both directly and indirectly -- and the industry is the mainstay of about 12 Ontario communities.

"In Ontario, we've got thousands of people and their families who rely on the auto industry to be on firm ground, so they can put food on the table and keep a roof over their heads. What the Prime Minister and I are saying is that those people and their jobs are worth fighting for," said Premier Dalton McGuinty, speaking alongside Harper Saturday. "No state or province employs more workers, and we're not going to give that up."

Harper and McGuinty stressed that the government will not be handing over blank checks, saying that all stakeholders will be expected to make adjustments to do their part to reduce structural costs and ensure a viable auto industry in Canada.

Harper also announced two additional steps the federal government will take to support the overall competitiveness of the auto industry. Harper said the aid to automotive suppliers would come in the form of additional account receivable insurance coverage through the federal Export Development Canada. A new facility will also be created to provide access to credit for consumers for car loans and dealer financing.