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Auto bailout simply will ‘keep lights on’: McGuinty
Tuesday, 6 January 2009 - 1:46pm
The automakers must deliver viable restructuring plans that will put them on a path to financial stability, and agree to certain terms and conditions that remain under negotiation.
Prime Minister Stephen Harper has warned the aid isn’t a “blank cheque” for automakers, and that Canadians expect their hard-earned money will be used to “restructure and renew” the industry.
But McGuinty said he expects the money will be used to pay off mounting bills, rather than retooling Canadian factories to produce the cars of the future.
“At this point in time, it is not so much for purposes of innovation and retooling as to keep the lights on, allow them to meet payroll, allow them to pay their suppliers and the like to keep things going—kind of nurse them along—so that in the interim, they can develop a more extensive plan that talks about fairly dramatic reforms,” he explained.
General Motors will receive up to $3 billion in repayable loans from the federal and provincial governments while Chrysler will receive up to $1 billion. Ford, the third member of the so-called Detroit Three, didn’t ask for a loan—just a line of credit to draw upon if required.
Outgoing U.S. President George W. Bush also is advancing $17.4 billion (U.S.) in emergency loans to GM and Chrysler.
The companies were supposed to get the Canadian aid in three instalments, with the first portion expected Dec. 29.
But the automakers still haven’t received their first instalment due to ongoing discussions between the Canadian and U.S. governments, provincial officials said yesterday.
The money should flow “soon,” they added.
Funding was deferred until mid-January at the request of GM and Chrysler, said Pema Lhalungpa, a spokeswoman for Industry minister Tony Clement.
The two governments will “exercise rigorous oversight” over the use of taxpayer money, including a requirement for companies to submit weekly reports on their cash positions, she added.
The Canadian loans won’t be extended past March unless both levels of government are satisfied the automakers have solid restructuring plans in place and underway.
Despite dismal December sales figures, McGuinty dismissed concerns he may be throwing money at a dying industry.
Even the Japanese automakers, which have fared better than their North American counterparts, are experiencing “their own particular challenges” in the midst of a massive global economic downturn, he noted.
“People just aren’t buying as many cars as they used to,” McGuinty said. “So, no, we remain as committed as ever to doing what we can to support the Big Three.”
THE CANADIAN PRESS
TORONTO—Billions of taxpayer dollars aimed at bailing out struggling automakers likely will be used to “keep the lights on” rather than directly transform the companies into more innovative businesses, Ontario Premier Dalton McGuinty acknowledged Monday.
The federal and provincial governments are providing up to $4 billion in emergency loans to Detroit-based General Motors and Chrysler to help stave off bankruptcy, and have vowed to attach major strings to the deal.
Prime Minister Stephen Harper has warned the aid isn’t a “blank cheque” for automakers, and that Canadians expect their hard-earned money will be used to “restructure and renew” the industry.
But McGuinty said he expects the money will be used to pay off mounting bills, rather than retooling Canadian factories to produce the cars of the future.
“At this point in time, it is not so much for purposes of innovation and retooling as to keep the lights on, allow them to meet payroll, allow them to pay their suppliers and the like to keep things going—kind of nurse them along—so that in the interim, they can develop a more extensive plan that talks about fairly dramatic reforms,” he explained.
General Motors will receive up to $3 billion in repayable loans from the federal and provincial governments while Chrysler will receive up to $1 billion. Ford, the third member of the so-called Detroit Three, didn’t ask for a loan—just a line of credit to draw upon if required.
Outgoing U.S. President George W. Bush also is advancing $17.4 billion (U.S.) in emergency loans to GM and Chrysler.
The companies were supposed to get the Canadian aid in three instalments, with the first portion expected Dec. 29.
But the automakers still haven’t received their first instalment due to ongoing discussions between the Canadian and U.S. governments, provincial officials said yesterday.
The money should flow “soon,” they added.
Funding was deferred until mid-January at the request of GM and Chrysler, said Pema Lhalungpa, a spokeswoman for Industry minister Tony Clement.
The two governments will “exercise rigorous oversight” over the use of taxpayer money, including a requirement for companies to submit weekly reports on their cash positions, she added.
The Canadian loans won’t be extended past March unless both levels of government are satisfied the automakers have solid restructuring plans in place and underway.
Despite dismal December sales figures, McGuinty dismissed concerns he may be throwing money at a dying industry.
Even the Japanese automakers, which have fared better than their North American counterparts, are experiencing “their own particular challenges” in the midst of a massive global economic downturn, he noted.
“People just aren’t buying as many cars as they used to,” McGuinty said. “So, no, we remain as committed as ever to doing what we can to support the Big Three.”
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