Canada: We need U.S. to buy autos

TORONTO (AP) — Only American consumers can save Canada’s auto industry, Canada’s industry minister said Tuesday.

Industry Minister Tony Clement said the Canadian government is still mulling over a bailout package for automakers.

Clement said 85 percent of the autos and parts produced in Canada flow to the U.S., where demand for vehicles has plummeted by 50 percent.

“The issue is not Canadian demand, the issue is American demand,” Clement said. “If you’re asking me what will save the auto sector in North America, it’s what American consumers do and buy, not just what Canadians do and buy.”

General Motors Corp., Chrysler LLC and Ford Motor Co. have large operations in Canada.

The economic crisis has pushed GM to the edge of bankruptcy. Chrysler, too, has been suffering. In response, the auto companies have closed plants and laid off thousands of workers.

Clement refused to comment on whether a tentative cost-cutting agreement between GM Canada and the Canadian Auto Workers announced Sunday was satisfactory to Ottawa.

GM, which submitted a restructuring plan last month, is eligible for loans of up to $3 billion under a government aid package, but both the federal and provincial Ontario governments have attached conditions to the money.

Those conditions include companies lowering their labor costs.

The tentative deal, on which 10,000 union members were voting Tuesday and Wednesday, was “just one piece of the puzzle” and was not by itself enough on which to base a bailout decision, Clement said.

“We have to look at viability from a broader perspective, which is what we’re doing,” he said.

“Part of the picture is labor costs; part of the picture is how management costs things out and their overhead costs. The other part of the picture is: What is your plan to get from where we are right now to where we have to be to have a viable auto sector?”

Discussions with GM, Chrysler and the Ontario government continue, he said.

Clement also appeared lukewarm to a suggestion from Ford Motor Co.’s top executive in Canada to offer an incentive to 3,500 Canadian dollars ($2,735) to drivers who scrap cars 10 years and older and purchase a new vehicle.

“If the Americans aren’t buying cars, just because Canadians are buying cars, doesn’t make up the difference,” Clement said. “The good news is that Americans can’t not buy cars forever.”