Canada's automotive industry on Oct. 28 asked the government to lend it cash to ride out a credit crunch and a sales slump not seen since the 1980s. "Assistance is required immediately if our country has any hope of salvaging a once-vibrant and prosperous industry that is experiencing a temporary but very serious financial crisis," Gerry Fedchun, president of the Automotive Parts Manufacturers Association of Canada, said in a letter to federal Finance Minister Jim Flaherty and Ontario Finance Minister Dwight Duncan. A copy of the letter was obtained by Agence France-Presse.
"Lack of profitability has been with us for two years already and many companies have exhausted their lines of credit," he said.
Fedchun, who said a recovery in the cyclical car industry is predicted to be at least 18 months away, heads the Canadian association representing parts suppliers for Ford, Chrysler, General Motors, Toyota and Honda.
In an interview with the daily Globe and Mail newspaper, Fedchun said the amount of money needed in short term loans could be as much as one billion dollars (US$770 million).
His association's call for action is supported by the Canadian Vehicle Manufacturers Association, which represents Chrysler, Ford and General Motors, and by GM Canada itself, the newspaper said.
On Setp. 27, troubled U.S. automakers learned from that they may be eligible for help under a $700 billion dollar economic rescue package. Big Three Detroit automakers also were offered a $25 billion shot in the arm by Washington in late September when legislators agreed to cover the cost of insuring a massive loan from the Energy Department. The loan was meant to help automakers reach a new fuel-economy goal of 35 miles per U.S. gallon by 2020.
Fedchun asked Ottawa to proportionally match this sum -- equivalent to 3.8 billion dollars (US$2.9 billion). He also asked the government to make research and development tax credits refundable so that "companies that are presently without taxable income can see an immediate benefit."
Copyright Agence France-Presse, 2008
