A few minutes ago the Federal and Ontario governments announcedthat they’re going to funnel $4 billion to GM and Chrysler to keep the companies afloat. Chrysler will get some cash fast $250 million, out of the $1 billion allotted to them will end up in their coffers tomorrow, while GM should receive their funds in early April.
We knew this was coming, but the context behind why the Canadian government is doling out its dollars, and the timing surrounding today’s announcement, is somewhat irksome.
First of all, the Conservatives were hoping to receive a restructuring plan from the companies tomorrow so they could show Canadians how their money will be used. Well, that’s not coming.
Then Industry Minister Tony Clement said in a press conference today that if the funds weren’t sent to Chrysler asap, the company would have filed for bankruptcy immediately and “whole plants or parts of plants could have been ripped up from Canadian soil and transferred to another country. And jobs would have been with them.”
Now, the funds that are going to the automakers are from a loanthat they could have tapped into back in December. They’ve decided to do it now, so the government is just following through with their late 2008 commitment. Still, the fact that they haven’t submitted their restructuring plans, and they’re sending the government into a panic by threatening bankruptcy, makes me wonder and this is part of the argument against helping the car companies is saving them really worth it if they don’t seem to respect what the government is doing?
President Obama is at least taking a tougher stand. He announced todaythat the American government would consider loaning Chrysler $6 billion ifthey came up with a “sound agreement that protects American taxpayers.” He is giving them enough money right now to complete their merger with Fiat (GM is getting enough cash to help them operate for 60 days), but it sounds like he’s willing to shut off the cash tap if they don’t come up with a comprehensive plan.
So, while Obama’s taking a more cautious apporach with the automakers, Canada’s government is shelling out cash at literally the same time the car companies are basically giving the country’s taxpayers the finger by not coming up with a restructuring plan.
No one wants to lose jobs, and if the auto plants close a lot of people will be out of work, but so far there are no measures in place to make sure the money the companies receive will actually be put to good use. There’s no direction from them, so we have no idea what they’ll do with the money, besides meet payroll.
The Canadian government needs to take a stronger stance here. They have to be willing to let the auto companies fail and risk putting thousands out of jobs, or they won’t see a plan, they won’t get their money back and we’ll have to rescue GM and Chrysler for months, or years, to come.