Ontario Premier Dalton McGuinty won't be surprised if Chrysler and General Motors ask for more money to continue operations -- in fact he says he expects it.
"We know that there are going to be more asks involved. We know that we're going to have to do more to help support the sector," he said Wednesday in Toronto.
The comments came after GM and Chrysler LLC announced massive U.S. production cuts and job losses on Tuesday -- in addition to calling for more cash from Washington.
In the U.S., General Motors and Chrysler have already received US$14.7 billion, but have now asked for much more, saying they need $39 billion in loans to continue operations.
McGuinty said he is gearing up to meet the expected demands which could come as early as Friday, when the Canadian arms of the companies must submit their Canadian restructuring plans in order to tap into C$4 billion in aid from the federal and Ontario governments.
McGuinty said he is waiting to see what the industry asks for, but acknowledged his government will have to do more than the $1.3 billion it is contributing to the $4-billion bailout.
U.S. restructuring plans included 47,000 job cuts at GM and 3,000 at Chrysler. GM said it would also close five U.S. plants, while Chrysler pledged to stop producing three vehicle models.
It's unclear how severe the Canadian auto industry will be affected and how much belt-tightening will be required before the bailout money flows.
"At first blush, it seems in the grand scheme of things it's relatively good news. (But) that's not necessarily saying much today, given the times," McGuinty said, who has hinted in the past he expects more contraction in the province's auto sector.
CTV Toronto's Paul Bliss said Wednesday that Chrysler wants to see the total compensation (pay and benefits) of CAW members fall to $62 per hour from $67.
But the president of CAW Union Local 222 says that wages aren't the problem for the domestic auto sector -- it's demand.
"Our members' wages did not cause this crisis, our members could work for nothing and not resolve this crisis, this is about a global financial meltdown and the loss of market shore for decades," Chris Buckley said.
Buckley echoed McGuinty's comments, saying he wasn't sure how much further GM could cut.
"We only have two plants left (with GM)," he said.
"The level of uncertainty has never been so high for anyone who works in the auto sector . . . we've suffering nothing but enormous job loss over the last few years."
The Chrysler sedan assembly plant in Brampton appears to be the most vulnerable if the Big Three were to shut down a plant in Canada. GM has previously announced the closing of its light truck assembly plant in Oshawa, something that takes place in June.
"We will have to work together with the federal government and see what we can do to preserve our share of this fully-integrated industry," McGuinty said, noting things remain unstable.
Michael Bryant, Ontario's economic development minister, wouldn't speculate on a final price tag for Ontario.
"I'm not going to draw the line now for the simple reason that we are in negotiations and we want to make sure that we get the best deal for the taxpayer that we possibly can, and ensure that it is a deal worth entering into," he said.
The provincial budget is expected in March. Finance Minister Dwight Duncan said Ontario will have to find a way to help the Big Three, even though it is already expected to run a multi-billion-dollar deficit.
"The cascading impact of the collapse or the failure of the Detroit Three and its impact on our economy would be absolutely catastrophic," he said.
U.S. moves
The UAW announced it had reached a tentative deal with each of the Detroit Three automakers on contract concessions -- a requirement of the U.S. bailout.
GM -- the world's largest automaker -- originally estimated it would need $18 billion to keep its U.S. operations afloat. That has now been increased to $30 billion -- including the $13.4 billion it has already received.
GM warned it could be out of cash by March without the new funds -- saying $2 billion in March and $2.6 billion in April are essential just to keep production lines rolling.
The company also wants a $7.5 billion credit line to fall back on if the economic recession worsens.
However, GM also claimed its books could be back in the black in two years, and the loans could be repaid by 2017.
"We have a lot of work to do," General Motors Corp. Chairman and Chief Executive Rick Wagoner said. "We're still going at this with a great sense of urgency."
Some analysts predict the cost of the bailout is miniscule compared to the social cost of having tens of thousands of Americans lose their jobs if such an important industry were to go under.
Chrysler LLC requested $5 billion in loans that came in addition to the $4 billion the company already received in December -- $2 billion more than estimated.
Ford has said it can make it through 2009 without relying on government bailouts.
U.S Treasury Secretary Timothy Geithner will be meeting with a team later in the week to analyze the plans and decide how to move forward.
Steven Popiel, an auto industry analyst with Synovate Motoresearch Co., said automakers in both Canada and the U.S. have to include all options in the plans they put to government -- even bankruptcy.
"They have to put it in the plan as a distinct possibility to show the government they are doing everything possible to try to mitigate against that bankruptcy," he told Canada AM.
He said it is vital that the automakers and unions demonstrate their willingness to make sacrifices to remain viable.
"They have to demonstrate to the public both in Canada and the U.S. that they're doing the best possible job to spend that money wisely. Without doing that I think we'll slip back into a discussion of are they viable, should we be funding them, why are we doing this?"
House Speaker Nancy Pelosi said she was hopeful the plans would help lead to the "transformation of our domestic automobile industry into a viable, technologically advanced, and globally competitive manufacturing force."
With a report from CTV Toronto's Paul Bliss and files from The Canadian Press
