Canada’s federal government and Ontario’s provincial government have set a deadline of Friday for struggling US-based automakers seeking financial support to provide detailed financial information and a restructuring plan for their Canadian subsidiaries.
The letter, signed by federal Industry Minister Tony Clement and Ontario Economic Development Minister Michael Bryant, was sent on Friday to General Motors, Ford and Chrysler.
All three automakers have pleaded to the US and Canadian governments for substantial financial aid to stave off bankruptcy and avert the loss of hundreds of thousands of jobs.
Their chief executives are heading back to Washington on Tuesday to show their restructuring plans to US lawmakers. Congress is expected to vote on whether to give them US$25 billion in government-backed loans the following week.
Clement and Bryant’s letter asks the Canadian subsidiaries to reveal their production plans, including how they will “ensure” that energy efficient cars are being made in Canada.
“Taxpayers deserve that these companies detail solid plans for a prosperous future in Ontario, and I’m confident we’ll get that,” Bryant said.
An analysis of “Canadian and Ontario competitiveness vis-a-vis your global operations, including each major component of your cost structure, and how it can be adjusted to ensure our competitive position going forward” is required, the letter states.
“Before we consider committing taxpayer dollars, the government needs to see solid, sustainable plans from the automakers as they pertain to Canadian operations,” Clement said.
The automakers must also provide an analysis of its Ontario pension liability, it said.
Clement and Bryant were in Detroit and Washington last week to meet with auto executives to discuss a possible US bailout for the battered industry.
Should the North American auto industry collapse, hundreds of thousands of jobs in both the US and Canada would be threatened.
GM said on Friday it would sell and lease back some of its non-manufacturing operations in Europe as part of its efforts to raise cash quickly.
The company’s European division has retained real estate agent Jones Lang LaSalle to help identify potential buyers. The company has the potential to raise about US$257 million.
“Investigations are under way as to what would be viable,” said Denis Chick, spokesman for GM’s United Kingdom and Ireland division in an e-mail on Friday.
According to Chick, properties in the UK that could be sold include its headquarters in Luton, a parts warehouse in Luton and an engineering site in Millbrook.
GM has also delayed multiple projects, including new vehicles and engines, in order to cut costs. Earlier this month the company said it would sell its 3.02 percent stake in Suzuki Motor Corp for US$230 million.
The company is burning through cash more rapidly than it is making money, and may be at its minimum cash levels by the end of the year. GM is banking on swift congressional approval of taxpayer-backed bridge loans. Company executives are currently preparing a viability plan to present to Congress by Tuesday.
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