According to one observer the North American automotive industry needs upwards of $35 billion to survive the current global financial crisis.
Vehicle sales are down across the continent and General Motors and Chrysler are continuing to ask for taxpayer bailouts to stave-off bankruptcy in the United States and Canada.
Industry observer Dennis DesRosiers believes it’s possible that Ontario and Ottawa will continue to prop up the failing automakers because they now have a vested interest in the success of the industry.
Premier Dalton McGuinty has said the Pension Benefits Guarantee Fund is not able to support Canadian auto workers should the industry collapse; it currently sits at $100 million.
“It’s one of the reasons why some people think that the Ontario government will put even more money into these companies,” DesRosiers said. “They end up putting money in one way or the other, so what’s the difference?”
DesRosiers said that GM and Chrysler have asked for around $10 billion to top up their pension funds. Combined with the other requests, taxpayers could be on the hook for as much as $750,000 per job saved by the bailouts.
For his part, CAW president Ken Lewenza says that the union won’t play much of a role in deciding the fates of GM and Chrysler. He said that the union was close to a settlement with Chrysler, when the Canadian negotiators got wind of the special task force’s recommendations to President Obama and broke off the talks.
“We’re on the sidelines, to tell you the truth,” Lewenza said.
Warren Wills worked at GM for 38 years and retired in 2004. He isn’t in a position to go and find a new job and he’s worried that his pension could take a significant hit if the company fails.
“I’m worried, but I can’t do anything about it,” he said. “It’s a difficult position for everybody.”
Wills has some hope though because he believes that in the end, GM won’t have to liquidate its assets as there is enough pressure from both US and Canadian governments. However, what happens in the US will decide the fate of the Canadian arm of the company.
Wills says that GM of Canada, a subsidiary of parent General Motors Corporation, is still a strong company, despite the troubles of its parent; Lewenza backs that up.
“I don’t think they need to go into (bankruptcy) protection. The Canadian operations were profitable each and every year until the global financial crisis hit, when the markets hit a wall and just stopped,” Lewenza said.
Lewenza said that the CAW contract is competitive with every other auto worker in North America, so he doesn’t see a reason to go back to the bargaining table, adding that without a merger with Fiat, Chrysler is doomed anyway.
Filed by Will Senn