CTV News: "GM controversy won't stop aid to auto industry, premier says"

[Blake Noble]

TORONTO — Premier Dalton McGuinty says Ontario will continue to offer incentives to the auto sector despite the controversy surrounding the planned shutdown of a General Motors of Canada Ltd. truck plant in Oshawa, Ont.

The move by GM, which will affect about 2,600 jobs when it closes next year, will not deter his Liberal government from providing other loans to secure investment, Mr. McGuinty said Wednesday as debate over the closure continued to rage.

Nor, he said, would his government think twice about making other loans on the generous terms as the one extended to GM.

“It's not something we pull out of the air,” he said. “It's based on what the competition's doing.”

Other jurisdictions, notably states south of the U.S. border, are willing to put more money on the table than Ontario to land auto deals, he said.

Mr. McGuinty also said he should have been more forthcoming about terms of incentives given to GM in return for a new manufacturing project.

His government had described the $375-million in federal and provincial funding for GM's Beacon project as an investment. Tuesday, however, when GM announced the move, it became apparent the aid consists of federal and provincial interest-free loans that are not repayable until 2053.

“We should have made that information available much earlier,” Mr. McGuinty told reporters at the provincial legislature. “The loan puts us in a better light than, frankly, what looks like a giveaway.”

The incentives consisted of a $175-million loan from the province and $200-million from the federal government.

At the time three years ago, his government was constrained by “commercial sensitivities,” he said.

GM received the single largest chunk of the $500-million in provincial aid for the auto sector. Mr. McGuinty said government officials have not revealed the terms of any deal it has struck with an auto company to any industry players.

GM Canada president Arturo Elias said Tuesday that the company likely will be in breach of the loan agreements, which will force it to repay money well before the original due date.

As part of the loan agreement, Mr. McGuinty revealed Tuesday, the company had agreed to maintain a specific number of employees at the truck plant. He did not disclose the number.

His comments were in contrast to how Economic Development Minister Sandra Pupatello last month described job pledges provided by GM. She insisted to reporters any job guarantees were attached only to the Beacon project itself. Under that project, GM is in the process of transforming two car plants in Oshawa into one flexible facility and investing in the company's Cami joint venture in Ingersoll, Ont.

Ms. Pupatello told reporters Wednesday that she thought the recent contract negotiated between GM and the Canadian Auto Workers would ensure that the pickup truck plant would remain open.

“We were feeling confident that we were holding on a bit longer, so this really was a surprise,” Ms. Pupatello said. “It was a surprise to all of us. This is probably the most significant event in the history of GM in the country.”

The Ontario government set up a $1.1-billion fund last year to help the sector develop more environmentally-friendly autos. But no funding has been distributed as yet.

http://ctv2.theglobeandmail.com/servlet/st...BN/ctv-business

[vonVeezelsnider]

Well Duh.

[daves87rs]

Hmmm...

[gm4life]

We all knew this was coming.

[CSpec]

I heard on the news this morning that Oshawa workers were asking the government to reimpose some draconian law from the 1960s that mandates Canadian sales must equal Canadian production or face penalties. I guess this is somewhat akin to the Chrysler bailout in the US, and just as crazy.

[CARBIZ]

Why is that Draconian? The rise of Detroit in the '20s and '30s either froze our or bankrupted the fledgling Canadian auto industry. It wasn't until the Auto Pact of '65 that manufacturers had a more stable environment for investing in Canada's auto industry. NAFTA superseded the Auto Pact and Canada benefited as long as our dollar was a .70. Now, Canada has lost more than 200k manufacturing jobs in the past couple years.

Hyundai and Kia, to name two, are enjoying a free ride in Canada. They build nothing here, contribute nothing and are given free access to our market. At least Toyota and Honda are paying lip service to the Canadian auto industry.

[FUTURE_OF_GM]

Why is that Draconian? The rise of Detroit in the '20s and '30s either froze our or bankrupted the fledgling Canadian auto industry. It wasn't until the Auto Pact of '65 that manufacturers had a more stable environment for investing in Canada's auto industry. NAFTA superseded the Auto Pact and Canada benefited as long as our dollar was a .70. Now, Canada has lost more than 200k manufacturing jobs in the past couple years.

Such is life... I live in the southern U.S. and our manufacturing industry DIED when NAFTA was signed.

If states "south of the border" are already willing to pay more for GM to produce there, then instilling a law such as this will only give GM added incentive to abandon Canada altogether IMO.

Hyundai and Kia, to name two, are enjoying a free ride in Canada. They build nothing here, contribute nothing and are given free access to our market. At least Toyota and Honda are paying lip service to the Canadian auto industry.

Unfortunately, such is life as well... Toyota and Honda have enjoyed a free ride here for years, yet we can't even touch their market. now it's Hyundai/Kias turn. The great west... As always, enslaved for the benefit of the far east.

[CSpec]

Why do goods consumed have to come from the same area on a map? Why does that matter? If Canada was a good environment for a company to build a car factory, then they would do it. Since the factories are moving, obviously the area on the map is not as good as other areas, so production moves. Those workers will find something else to do, as has always been the case when industry evolves.

[Dragon]

Why is that Draconian? The rise of Detroit in the '20s and '30s either froze our or bankrupted the fledgling Canadian auto industry. It wasn't until the Auto Pact of '65 that manufacturers had a more stable environment for investing in Canada's auto industry. NAFTA superseded the Auto Pact and Canada benefited as long as our dollar was a .70. Now, Canada has lost more than 200k manufacturing jobs in the past couple years.

Hyundai and Kia, to name two, are enjoying a free ride in Canada. They build nothing here, contribute nothing and are given free access to our market. At least Toyota and Honda are paying lip service to the Canadian auto industry.

it wasn't so much superceded by NAFTA as chunks of it went against WTO rules so the law was tossed or at least ignorned