Canada Follows American Lead on Automakers
Federal, Ontario Governments say No to Restructuring Plans
Mar 31, 2009
The announcement came at a press conference attended by Federal Industry Minister Tony Clement, Minister of Finance Jim Flaherty, and Ontario’s Industry Minister Michael Bryant.
Obama Administration’s Stand
US President Barack Obama announced his government’s rejection of Chrysler and General Motor’s’ (GM)’s restructuring plan. The American government said Chrysler by itself wasn’t a viable company. He gave them one month to reach a technology-sharing agreement with Italian owned Fiat. If the two companies come to an agreement, the government would consider providing the requested $6 billion.
GM was given a 60-day extension, during which, the government would provide the troubled automaker with operating capital. The extension follows the resignation of company CEO Rick Wagonner. In remarks published on cbc.ca Wagonner hinted his departure wasn’t of his own volition: “I was in Washington for a meeting with administration officials. In the course of the meeting it was requested I step aside as CEO of GM, and so I have.”
Obama’s statement implied a high level of frustration with the industry, and a willingness to solve it. In comments published on cbc.ca he stated: “We have reached the end of the road. And we as a nation cannot afford to shirk responsibility any longer. Now is the time to confront our problems head on and to do what’s necessary to solve them.”
Kent Kresa, a member of GM’s board of directors has stepped into the role as non-executive chairman.
Canadian Government’s Unified Response
Federal, and Ontario Provincial ministers gave the Canadian subsidiaries the same message. Their deadlines echo the response of the American administration- 30 days for Chrysler to do a deal with Fiat, and 60 days for GM to finish restructuring. In remarks published by the Canadian Press, Ontario’s Industry Minister was firm in his assertion that the reorganization plan be profitable: “No profitable plan, No money.”
While GM and Chrysler find ways to restructure the two levels of government agreed to advance the companies money totaling $4 billion. GM’s portion will be $3 billion to be distributed in early April. Chrysler will get $250 billion immediately amidst suggestions the company may be unable to meet pay roll obligations. These suggestions were backed up by Federal Industry Minister Tony Clement in comments published by Canadian Press: “Very clearly, if the money had not been forwarded today, they would not have been able to make payroll today or tomorrow.”
Adding to Chrysler’s worries are ongoing negotiations between them and the Canadian Autoworkers Union (CAW). Talks stalled leaving the two parties at an impasse. Union Leader Ken Lewenza insists on holding the automaker to the same deal as he struck with GM and doesn’t want to re-open negotiations. In comments published on cbc.ca he insists the matter can’t be solved by negotiation: “We did it (negotiation) a month ago. Opening up bargaining won’t resolve the problem”
Above all the negativity, one note of optimism was heard. Federal Industry Minister Tony Clement issued a positive prediction for the industry’s future in comments printed by the Canadian Press: “ Going forward the industry will undoubtedly be smaller, but if our efforts are successful it will be viable and it will support good jobs for Canadians."
