The Canadian units of the Detroit Three auto makers have stepped up their campaign to win government financial help, warning Ottawa and Ontario that the industry “is struggling for survival.”
Chrysler Canada Inc., Ford Motor Co. of Canada Ltd., and General Motors of Canada Ltd. are seeking meetings with Ontario Premier Dalton McGuinty and federal Industry Minister Tony Clement to press their case for emergency credit in the form of loan guarantees, low-interest loans or commercial paper funding programs.
The three auto makers said they support a request by the Automotive Parts Manufacturers' Association of Canada, which told the two governments last month that parts suppliers need emergency help. APMA president Gerry Fedchun said suppliers need about $1-billion in emergency financial help.
The request through the Canadian Vehicle Manufacturers' Association comes as the parent companies of Ford and GM announce what are expected to be dreadful third-quarter financial results today and another round of job cuts, temporary plant closings and other measures to conserve cash and reduce costs.
“The numbers, as we know, are going to be just horrific,” veteran industry watcher Joe Phillippi, who heads Auto Trends Consulting Inc. of Short Hills, N.J., said of the financial results.
GM is expected to post a loss of $5.30 (U.S.) a share, but more importantly, the company dramatically increased the cash it burned through during the quarter to $4.8-billion, worse than the $3-billion drain in the second quarter, Itay Michaeli, auto analyst for Citigroup, said in a note to clients yesterday.
“This would leave GM's year-end 2008 cash balance at $15-billion, just above its $11- [to] $14-billion minimum operating threshold, emphasizing the urgent need to address liquidity,” wrote Mr. Michaeli, who expects more cost-cutting and a trim in capital spending.
Ford's cash burn is expected to double to $3.4-billion for the quarter, from $1.7-billion a year earlier, he added.
GM, which has been in negotiations with Chrysler LLC parent Cerberus Capital Partners LP about a merger of the two auto makers, has scheduled a company-wide internal broadcast for 11 a.m. today to discuss what a memo said were “important changes” to meet the challenges of the credit crisis and the slump in U.S. sales.
“I'm nervous,” said Chris Buckley, president of Canadian Auto Workers Local 222, which represents employees at GM's pickup truck and car assembly plants in Oshawa, Ont.
Ford sales analyst George Pipas hinted on a conference call earlier this week that the No. 2 Detroit auto maker was preparing to announce cuts in production of crossover utility vehicles. Three such vehicles are assembled at the company's Oakville, Ont., complex.
Mark Nantais, president of the CVMA, confirmed that Chrysler, Ford and GM are seeking meetings, but would not elaborate.
“With the global financial liquidity crisis and the collapse in the U.S. consumer market, Ontario's auto industry, which exports 85 to 90 per cent of its finished product into the U.S. market, is struggling for survival,” the CVMA said in a letter to Mr. McGuinty and Mr. Clement.
AUTO MAKERS ON THE BRINK
-- Toyota Motor Corp. said annual profits are expected to plunge more than two-thirds to the lowest level in nine years, warning the global auto industry faces an “unprecedented” crisis.
-- Chief executives of the three U.S. auto makers lobbied House Speaker Nancy Pelosi yesterday for up to $25-billion (U.S.) in additional aid and access to the U.S. Federal Reserve Board's borrowing window, sources said.
-- The Bush administration said auto makers could soon begin applying for money under an existing $25-billion package of low-interest loans to help them meet fuel-efficiency requirements.
-- Auto parts maker Dana Holding Corp. said it will close up to 10 U.S. plants and cut 2,000 more employees than originally planned as its losses grew. From wire services