Canada Ponders Auto Industry Aid Package

Canadian officials today launch the second leg of a 2-day U.S. visit to explore aid for the auto industry.

Federal Industry Minister Tony Clement, accompanied by Ontario’s Minister of Economic Development Michael Bryant, were to meet in Washington with government representatives to “gather information on (aid) options being considered” by the U.S. Clement and Bryant met Wednesday in Detroit with representatives of General Motors Corp., Ford Motor Co. and Chrysler LLC.

In recent weeks, as the industry crisis worsened, Canada’s federal government and the Ontario provincial government have sent signals indicating they would entertain direct aid packages – a significant departure from current practice.

Longstanding Canadian policies prohibit assistance such as tax breaks, which are commonplace in the U.S. Instead, auto makers that invest in Canada receive employee-training funds and infrastructure improvements to support their Canadian investments.

But there is precedent for bolder measures. When Chrysler Corp. sought help from the U.S. in 1979, Canada’s federal government also offered loan guarantees. However, the loans were never sought because the auto maker turned itself around more quickly than anticipated.

According to Ward’s data through October, finished-vehicle output from Canadian plants represents 3.7%, 2.5% and 3.6% of the total North American output by Chrysler, Ford and GM, respectively.

Compared with like-2007, Chrysler’s total is up 0.3 percentage points, Ford’s output is up 0.2 points, while GM’s Canadian production is down 1.8 points.

Since 2004, Ontario has been North America’s most prolific auto-producing region, surpassing Michigan, Ohio and Mexico.