TORONTO – An aid package for General Motors will likely involve bigger-than-expected sacrifices from taxpayers, unions and the company if the recent concessions required to bail out Chrysler are any indication, Ontario Premier Dalton McGuinty said Tuesday.
The federal and provincial governments had to provide more funds than anticipated in a C$3.8-billion deal in April to help Chrysler survive – an amount that was almost as high as the $4 billion initially promised to cover both automakers.
“We came to the table with more money than we originally anticipated,” McGuinty said of Chrysler.
“The CAW clearly gave more than they anticipated giving. Some of the concessions placed on creditors south of the border and here in Canada were more than they anticipated.
“But we found a way through it.”
GM has until Friday to work out a deal with the Canadian Auto Workers. A June 1 deadline looms over the company to present its restructuring plans to government.
McGuinty said he remains hopeful all sides can come to a deal by the end of the month, saying that Canada and the U.S., along with GM, the union and the creditors, all “understand how important it is for us to come together on this sooner rather than later.”
“We learned some things along the way with Chrysler and I think we might be able to apply those lessons to GM,” he said.
“But the solution for GM is going to look different from the one that we came up with for Chrysler because it’s a different entity with different kinds of challenges.”
Ontario Opposition Leader Bob Runciman said McGuinty’s comments should concern taxpayers, since there seems to be no bottom to how much the government is willing to pay.
“There’s no question that what he’s talking about is probably more job losses and certainly more taxpayer money going into what, at the moment, appears to be a bottomless pit,” Runciman said.
Economic Development Minister Michael Bryant said he expects negotiations to go right to the deadline but is working to ensure taxpayers are protected.
“We are in a negotiation and so, certainly, we are taking a hard line on behalf of the taxpayers,” Bryant said.
“We don’t talk about what the government’s bottom line is, frankly, because we need to see some results from all the stakeholders, all the players in this before the government can make a decision.”
NDP Leader Andrea Horwath said she’d like to see the government take a bigger stake in GM than it did in Chrysler, adding that any deal should include a cap on executive compensation.
Horwath introduced a bill in the legislature Tuesday that, if passed, would ask that any corporation that received government money should cap executive pay at $400,000.
On Monday, General Motors Corp. CEO Fritz Henderson said he was still holding out hope that the company can restructure without court protection. Still, he added the tasks to complete before June are large, and bankruptcy protection is becoming more probable.
The automaker is looking at its operations country-by-country to determine where it might have to file for bankruptcy, but Henderson says a U.S. bankruptcy doesn’t necessarily mean that GM would file in other locations.
Federal Industry Minister Tony Clement has said Ottawa would prefer a “surgical” process for GM so it can emerge quickly from court protection if bankruptcy is inevitable for the troubled company.
Under Chrysler’s restructuring plan, Canada and Ontario will get a two per cent equity stake in a restructured Chrysler LLC and will provide US$2.42 billion in new financing to help the company survive. The U.S. government will own eight per cent of the company.
The investment brings Canada’s total contribution to the survival of Chrysler so far to C$3.775 billion – including $1 billion already promised to the automaker, $750 million of which has already been drawn down.
The province is contributing a total of $1.25 billion, while Ottawa would kick in about $2.5 billion.
In December, Ottawa and Ontario offered loans to General Motors Canada of up to $3 billion and Chrysler Canada up to $1 billion – totals based on the U.S. aid and proportional to their Canadian production.
GM Canada currently employs 10,300 hourly workers in southern Ontario at car and truck plants in Oshawa, a transmission plant in Windsor and an engine plant in St. Catharines. It also operates the GM-Suzuki joint-venture CAMI plant in Ingersoll.
The truck plant in Oshawa is slated for closure this spring while the Windsor transmission plant will close next year.
