Chrysler Canada needs a $1 billion lifeline in order to stay in business

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Clement, take auto mission to Washington

Canadian officials are travelling from Detroit to Washington on

Thursday, the latest stop in their fact-finding mission to learn more

about a possible $25 billion bailout plan for U.S. automakers.

However, that bailout looks like it might be doomed after a Senate

vote scheduled for today was cancelled following meetings with auto

executives on Tuesday and Wednesday.

Some of the news around that meeting has focused on the fact

executives spent $20,000 to travel from Detroit to Washington in

private jets.

The trip to Capitol Hill by Industry Minister Tony Clement and

Ontario Economic Development Minister came as reports

emerged that Chrysler Canada had put a dollar figure on its survival.

The Globe and Mail reported Thursday that Chrysler Canada said it

needs a $1 billion lifeline in order to stay in business.

The request would make Chrysler the first Canadian arm of the Detroit

Three automakers to ask for a specific amount of funding.

The request was put to Ottawa and Ontario, but there were few details

about what form Chrysler would like the assistance to take or how it

would break down between the two levels of government.

Chrysler, along with Ford and General Motors, are all seeking loans

or loan guarantees to get credit flowing again amid a shifting North

American auto market and tough economic times.

In the speech from the throne on Wednesday the federal government

indicated there would be more support for the auto industry, but

there were no details about how that would roll out. More information

is expected in an economic update expected soon.

Don Drummond, chief economist for TD Bank, told CTV's Canada AM that

an auto bailout is the best option for Ottawa and Queen's Park.

He said the failure of one of the automakers' Canadian operations

would be devastating to the economy, flooding the job market with

skilled workers with no place to go.

He pointed out the auto industry contributes a minimum of 5 per cent

of Ontario's gross domestic product, and there would be

reverberations across Canada.

" I think you're stuck, you have to give a lifeline, " Drummond said.

" We have to preserve the value and the skilled labour in there,

that's just too much of a knock-on effect to come to the rest of the

economy cold turkey, " Drummond said.

Ken Lewenza, president of the Canadian Auto Workers, has added his

voice to the chorus of those calling for government assistance for

the industry.

He told Canada AM that government funding would represent

an " investment in the economy " rather than a bailout, and would

result in a return on the investment.

He maintained his position that the union has already made great

sacrifices to help the industry -- giving up almost $1 billion in

cuts over the next three years.

" Last May we recognized that we were getting into some serious

problems with the rise of the Canadian dollar, with the market share

declining. So we went to the corporations in advance of anybody and

said what can we do as an organization to put ourselves on solid

footing? "

" As a result of that the Big 3 will save $900 million of savings that

we were able to generate through the last set of negotiations. So we

were proactive. "