Canada, province agree on conditional auto aid

The package, the amount of which is based on Canada’s proportional share of North American car and truck production, is conditional on the U.S. government first providing a rescue package for the Detroit Three, federal Industry Minister Tony Clement said at a media briefing in Toronto.

He said he expects the U.S. administration to approve a package “very soon,” after the Senate rejected a US$14 billion proposal late Thursday, deepening uncertainty for the sector.

“Any action by the federal and provincial governments to support the auto sector as it restructures must be equally integrated with action taken by the United States,” Clement said. “The federal and Ontario governments are prepared to move quickly if and when the Americans approve a support package.”

On Friday, the White House said it might dip into the US$700 billion U.S. bank recovery fund to stave off an auto industry collapse.

Unlike in the United States, there is little legislative resistance to a Canadian bailout of the auto industry, even though it goes against the grain of the Conservative government.

Ontario is the base of production operations for General Motors Corp, Ford Motor Co and Chrysler in Canada, and the U.S. automakers and their parts suppliers employ hundreds of thousands of workers.

Local mayors in such Ontario cities as Windsor, Oshawa and St. Thomas have waged a campaign to convince governments to pony up aid for the industry, saying their communities would be devastated without it.

“We can be proud of our past, we can be proud of our productive capacity here and our workers, but we also have to have an understanding that we’re in what I call an existential moment,” Clement said.

“Is this industry going to exist in any capacity two years from now, five years from now?”

The announcement came after Canadian Auto Workers President Ken Lewenza urged Prime Minister Stephen Harper to proactively announce a Canadian package, which could then put pressure on the United States.

“We’re pleading, in particular with Mr Harper, to move and move swiftly in support of the Canadian auto industry and in support of our existing facilities,” he told a union news conference in Toronto.

It was uncertain what concessions the CAW might make. A dispute over concessions from the United Auto Workers was one reason an aid package failed in the U.S. Senate.

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