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GM Doesn’t Need Our Stinking Money

January 24th, 2009

GM has said they don’t want, nor need, Canada’s short term loans, for now:

General Motors Corp.’s Canadian arm says it may not use $3-billion in emergency aid pledged by the Ontario and federal governments several more months, stating it is focused instead on long-term restructuring talks to ensure it keeps operating.

It seems innocuous enough, but other media are reporting this story as GM has refused Ottawa’s money:

General Motors of Canada has turned down an offer by the federal and Ontario governments of emergency short-term aid, a move that has stunned some analysts and left negotiations on a highly touted auto bailout in limbo.

Count this analyst along with the stunned if this is true.  There are only two reasons to turn down the money. One is that they don’t intend to continue in Canada – perhaps new American money from the new American administration comes with a “no jobs leave America while you have jobs elsewhere,” clause.

The second possible reason is that the CAW is not playing ball refusing all concessions. GM would then not be eligible for the money. However, if that was true I would expect GM to say so, thus putting pressure on the CAW to compromise.

Whatever the reason, one thing is clear. GM wants the flexibility to leave it’s Canadian operations, at least in the short term. A company who wasn’t expected to make it through Christmas doesn’t leave $3B on the table. This one looks like bad news for the Canadian auto industry.

Auto Industry, CAW

  1. January 24th, 2009 at 11:44 | #1

    This may sound cruel, but I am glad GM turned down the loan. For one, GM in Canada is failing due to bad business decisions and the CAW preventing GM from making good business decisions with huge union contracts… then let them fall.

    Free markets provide for survival of the fittest. In Ontario, there is the brand new Toyota plant in Woodstock. It is poised and ready to ramp up production, and provide 7 jobs in that region for every one automotive job. Let the lost production at GM/Chrysler go to Toyota, in the natural order of free markets.

    Better products, more efficient flexible assembly lines, and superior ‘team’ work… survival of the fittest.

  2. January 24th, 2009 at 11:53 | #2

    I’ve noted before, Rural and Right, that as I work for Chrysler I can’t possibly report on this issue fairly. I agree with everything you say, except it means I’m out a job. I understand the economics fully, I just can’t get past the personal part where my life is thrown that curve.

    However, note that I said this one is “bad news for the Canadian auto industry,” not for Canada, not for Canadians. Some Canadians, yes.

    At the end of the day, the chances that the bailouts are merely prolonging the day of reckoning is high. If not this year, three or five years from now.

  3. January 24th, 2009 at 12:02 | #3

    Maybe the coffee hasn’t kicked in yet, but I’m confused.

    You say you work for Chrysler but GM’s decision not to accept bailout money means you’re out of a job?

  4. January 24th, 2009 at 12:03 | #4

    @Brian Gardiner
    Brian, I hope that, fiat buying 35% share into Chrysler helps bring change, to Chrysler Canada. I own a Canadian made tractor with a fiat engine in it, It was made in 1974 and runs beautifully.

    I also can not report fairly on this issue, I work for Honda of Canada and have a built in bias against the CAW, and our competition, the Detroit three. At HCM we recently were cut from 4 shifts to 3 shifts, and have had 10 non-production days to balance production to the market downturn. On a bright note our engine plant is now running at full capacity recently ramping up to 2 shifts from one.

  5. January 24th, 2009 at 13:31 | #5

    @Joanne (T.B.)

    Sorry Joanne, poorly worded. What I mean is I have a hard time screaming against the auto industry bailout because they could directly affect me. It’s not this story that directly applies to me, but Rural and Rights overall opinion that “Free markets provide for survival of the fittest.” Usually I agree, this time I have more trouble with it.

  6. Paul B
    January 24th, 2009 at 15:52 | #6

    I don’t know if rural is aware, but the Honda and Toyota plants in Ontario have received hundreds of millions from all levels of government. Donated land, tax-free periods of up to 5 years, discounted utility rates, worker training hours paid by the government, etc.

    I do agree the companies have been mismanaged, but this supposed superior quality of imports is a load of hooey. All manufacturers are very close in quality terms. What amazes me is the media spin on how the imports do no wrong, yet if a newly launched domestic auto has not enough cup holders it’s front page news. Toyota’s quality in particular is moving downward.

  7. January 25th, 2009 at 11:09 | #7

    Thanks for clarifying that, Brian.

    I have to agree that the auto industry affects many spin-off industries in Southern Ontario and is a special case.

    However, I think that the Government should stick firm to whatever conditions it has asked.

  8. January 28th, 2009 at 19:31 | #8

    I am not sure about Toyota but it is true that Honda of Canada received several years tax free from the Town of New Tecumseth that it made its home in, and funding for infrastructure from the province. Our new engine plant was funded 100% by Honda but there was infrastructure paid for by the province and no land was donated to Honda. I am sure that GM, Ford, Chrysler, Toyota, John Deere, ect would receive similar incentives for setting up a factory in any area.

    Brian I owe you an apology, I did not realize that you worked for Chrysler, If I did I would not have expressed my opinion on your blog comments. Sorry…

  9. January 28th, 2009 at 22:32 | #9

    No apologies required. Your comments were fair and welcome. If you search this blog, I have been very hard on Chrysler and on the CAW at times. And to tell you the truth R&R, I think we will both be out of jobs sooner rather than later. I believe the day is not that far off when they build as many cars in North America as they do TV’s.

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