Ottawa willing to let GM, Chrysler collapse

[Guest guest]

Good. Pity the US doesn't have this sense.

Administrator

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Ottawa willing to let GM, Chrysler collapse

JANET MCFARLAND

Globe and Mail Update

April 16, 2009 at 12:22 PM EDT

TORONTO — Ottawa is prepared to let Canada's two financially troubled car makers

collapse rather than provide long-term financing to companies without a viable

future, Industry Minister Tony Clement said Thursday as he ratcheted up the

pressure on the Canadian Auto Workers union to negotiate new deals to slash

wages and benefits.

Mr. Clement told a news conference in Toronto he believes Fiat SpA is taking a

" logical position " in demanding wage concessions in Canada before following

through with a proposed strategic alliance with Chrysler LLC. He added Ottawa is

also unwilling to make major investments in companies that do not have

appropriate cost structures to survive in the long term.

When asked whether he would be willing to let Chrysler Canada Inc. or General

Motors of Canada Ltd. go bankrupt if the unions do not agree to cut costs, Mr.

Clement replied: " We have to examine every possibility. "

" I don't think it is in the interest of the Canadian public to have continued

funding to a company if there is no deal with their union and if there is no

outside investor, or no outside partner in the case of Fiat, " he said. " Those

were our conditions.... So if you're asking me whether I'm willing to funnel

Canadian government money, taxpayer money, when we do not have an acceptable

plan on a go-forward basis, I cannot do that. I don't think it would be

responsible. "

CAW president Ken Lewenza has called Fiat's proposal to cut labour costs at

Chrysler Canada by $19 an hour an " unreasonable " demand and has said it is " not

going to happen, " arguing the CAW is competitive with unionized environments in

the United States.

In response Thursday, Mr. Clement said he appreciates it is a difficult reality

for the union to accept, especially since the car makers have had a tradition of

pattern bargaining where the union strikes a deal with one of the Detroit Three

car makers and it sets a pattern for the others. But he said it is time for the

CAW to accept it has to break the pattern in terms of cost reductions with

Chrysler.

" If everyone is saying – and they are saying – that Chrysler in order to be

competitive has to go beyond the pattern in terms of cost reductions and cost

competitiveness, I believe the CAW has to have regard for that, " he said.

The Canadian and U.S. governments have given Chrysler until April 30 to come up

with a viable long-term restructuring plan before they will provide financing to

bail it out.

" I know this is difficult, " Mr. Clement said. " I know this affects real workers

in real towns and cities across Ontario. This is not an easy thing. But the

alternative is that there is no deal in place. And if there is no deal in place,

there will not be long-term funding arrangements with the government of Canada.

And in fact we have the right to call our loans. "

Mr. Clement was speaking in Toronto at a news conference to announce a new

$145-million program called Automotive Partnership Canada to provide funding

over the next five years to university researchers to develop new technologies

with direct applicability to the automotive sector.

The program was designed after consultations with industry officials, who said

they want the money to focus on specific areas including the use of alternative

fuels, manufacturing with lighter-weight materials and next-generation

manufacturing techniques.