By on March 31, 2009

Mega dittos from our neighbors to the north. The Globe and Mail reports that the Canadian government is also playing hard man re: GM and Chrysler’s call on federal bailout bucks. Yada, yada, yada, restructure, union concessions, new plans, bankruptcy. And then, this:

Chrysler was unable to meet its Canadian payroll today without a $250-million advance on a $1-billion bridge loan from Canadian taxpayers. To qualify for up to $4-billion in long-term aid, Chrysler has to conclude now-stalled negotiations with the CAW on a cost-savings contract and complete the Fiat deal.

To stave off an immediate crisis, the federal and Ontario governments offered the bridge loans—including up to $3-billion for GM—to allow them to continue operating while they work to satisfy U.S. and Canadian government demands.

The CA$250 million is an advance on the billion dollar bridge. And make not mistake about it: ChryCo is sucking on fumes.

The company, which employs 9,500 workers and has assembly plants in Windsor and Brampton, Ont., is teetering on the brink of failure.

“Very clearly, if the money had not been forwarded today, they would not have been able to meet payroll today or tomorrow,” Mr. Clement told a news conference.

The result would have been bankruptcy protection and, potentially, the liquidation of Chrysler’s assets in Canada.

Chrysler no doubt welcomes the contribution to their cash flow, but they won’t be glad to hear one of the strings attached to the next round of bailout bucks—should they ever get that far: they can’t use the money to pay their $500 million tax bill. That idea makes my head hurt. [Thanks to boosterseat for the link.]

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25 Comments on “Bailout Watch 476: Canadian Government Fronts ChryCo CA$250 Million for Payroll...”


  • avatar
    superbadd75

    The money can’t be used to pay taxes? Why can’t I make sense out of that statement?

  • avatar
    brettc

    Jesus, they can’t make payroll without government help? Chrysler has now officially become a non-profit corporation. (They’ve been one for a while, but now it’s official).

    And the Confederation Bridge is awesome. It’s a testament to what can be done by humans if enough money is spent on engineering/R & D.

  • avatar
    Airhen

    Wow… can’t even make payroll? That’s tough when you have to wait a week to make sure your paycheck clears (I’ve done so).

    Fiat must be running away as fast as they can.

  • avatar
    Johnny Canada

    The company can’t make payroll, but Chrysler CAW members are standing firm against any concessions. It’s a mad mad mad mad world.

  • avatar
    Ken Strumpf

    Inability to meet your payroll is the very definition of bankruptcy. Must we actually wait a month for this farce to play out?

  • avatar

    Speaking of Chrysler, it looks like Cerberus is going to get hosed…

  • avatar
    psarhjinian

    Jesus, they can’t make payroll without government help? Chrysler has now officially become a non-profit corporation. (They’ve been one for a while, but now it’s official).

    You know what? I think I’d like Canada to have a native industry, and you really could do worse than the Caravan and LX cars.

    Nationalize the buggers.

  • avatar
    mikey

    Tough times for Canadian auto workers.We are so connected/dependent on the USA we can’t do any thing unless we get the green light from Washington.

    Point to keep in mind.The Canadian government,provincial or federal has not advanced any monies to GM…..yet!

    I find that fact,both strange,and a little scary.

    Now with Chrysler,who knows?Twice in the last 48 hrs the CAW and Chrysler have had a deal.Both times Chrysler took it off the table.Something smells here. We will see.

  • avatar
    bluecon

    No, don’t nationalize. Sell it to the CAW for a dollar and let the socialist run it. Let the socialists use their own money to run it. I am not against nationalizing it just against being forced to pay for the Leyland copycat.

    Socialism works until the socialists run out of other peoples money.

  • avatar
    brettc

    If Chrysler pulls out of Canada, Windsor is going to have a lot more problems, along with the Brampton area. So having Chrysler become a Crown corp might not be a horrible idea if the Canadian government really wants to keep the jobs around.

  • avatar
    mikey

    @brettc No way,we don’t need anymore “Crown corps”
    Have a look at the CBC, if you need an example of why we don’t need another Crown corp.

  • avatar
    NickR

    Inability to meet your payroll is the very definition of bankruptcy. Must we actually wait a month for this farce to play out?

    Ken Strumpf, this was exactly my thought when I watched this on the local news last night. They have to run to the government for cash two days before payday so employees cheques don’t bounce? I could hardly believe my ears. To refer to a company in that position as a ‘corporation’ is laughable.

    And a big ‘no kidding’ to the comments about Fiat. ‘Hey, let’s merge, we’d have gone bankrupt yesterday if it wasn’t for a huge transfer from the government. Hey, where are you going? At least finish your latte.‘

    mikey, re: the CBC you are soooo right about that.

  • avatar
    psarhjinian

    I find that fact,both strange,and a little scary.

    GM could meet payroll. Chrysler could not.

    I think it’s despicable that Cerberus won’t float Chrysler the money to pay it’s workers. If their stewardship is so poor that they’re expecting government to meet payroll, I see absolutely no object to seizing the rest of the firm (or at least it’s Canadian assets) in it’s entirety.

  • avatar
    psarhjinian

    @bluecon: No, don’t nationalize. Sell it to the CAW for a dollar and let the socialist run it. Let the socialists use their own money to run it.

    That’s not a bad idea, though I would hardly call the average CAW member a socialist. There are any number of collective corporations, and many run quite well.

    @bluecon: Socialism works until the socialists run out of other peoples money.

    Every economic model suffers from that. For example, capitalism is going to have real problems with there’s not enough people with money to buy goods.

    @mikey: Have a look at the CBC, if you need an example of why we don’t need another Crown corp.

    Now, to be fair, none of the Canadian media giants are doing well; CanWest and CTV-GlobeMedia are ostensibly even worse off the the CBC. And then there’s the perennial basketcase that is Air Canada: worse service every year since they were privatized, and now about to enter bankruptcy for the second time in six years.

    I don’t think crown corporations are necessarily bad, just as private companies aren’t any good. For every Research in Motion we have a Corel; conversely, for every CBC we have an LCBO.

    Chrysler is utterly broken and already dependent on the government to meet payroll and, likely, supplier expenses. If the is expected to meet operating expenses, it’s either the trashcan or Nationalization. I’ll take the latter, as would everyone in Windsor or Brampton.

  • avatar

    This sucks in so many ways.
    Let Magna pick up the minivan and Brampton plants under C7..the rest is useless anyway.

  • avatar
    bluecon

    I am not against you socialists.

    Just don’t steal my money to fund these socialist programs. The government funds the CBC at the rate of a billion plus dollars per year and nobody watches it. Only a socialist would consider that a success.

    Nationalizing Chrysler is just stealing the money from the successful and handing it to the failures. Why socialism doesn’t work.

    And when the government employs half the people in the country and taxes away half the peoples income as well as placing draconian regulations on industry while funding every nit wit scheme like global warming the economy is bound to fail. Our economy is far from free market capitalism and now we are all going to pay the price. Whether the government wastes this money or not Chrysler is done, so why spend(waste) other peoples money on this.

  • avatar
    86er

    And the Confederation Bridge is awesome. It’s a testament to what can be done by humans if enough money is spent on engineering/R & D.

    Agreed, I had the pleasure of traversing it (in a Chevy, but not a Traverse) 2 summers ago on my way to beautiful PEI. (This message brought to you by the Prince Edward Island Tourism Board > just kidding, Robert).

    More germane to the article, I am sad to see another fine plant like Brampton go away, just like the gold standard GM Oshawa 2 facility.

  • avatar
    psarhjinian

    Just don’t steal my money to fund these socialist programs.

    So what programs should we fund? Only those you like?

    That’s the point of floating Chrysler and GM: it’s not whether or not it’s something everyone directly supports, it’s because if it isn’t done, Brampton and Windsor (and Oshawa and St. Catharines) effectively implode. Windsor is already running nearly 10% unployment: imagine the same situation across southern Ontario.

    The social and economic cost of that kind of unemployment, very quickly, becomes a lot more expensive than the bailout, unless your solution to social problems is “let the poor bastards hang”

    Short of just putting people on general welfare—a bad idea, by the way, next to keeping them employed—what’s your suggestion?

  • avatar
    bluecon

    What you sociaists should do is start club for socialists and collect money from socialists to invest in this sort of stuff. Not taking it at gunpoint as is done now. The fact that I worked hard and lived within my means does not mean I should pay for those that did not.

    You see the big problem is that only a crazy person would invest in Windsor where the unions control everything and you toe the line or else. There are much better ways to get a return on money in Canada than investing in industry, and therein lies you problem. Why risk your money only to see the unions and socialist governments gobble up any success you might have. The socialists have run out of other peoples money to spend.

    So you see at this point the governments and the voters have already spent the future away. Something like the German Economic Miracle is what we need and we get the Russian revolution instead. Only hard work will fix this, there is no magic wand. Our economy has fundamentally changed like Humpty Dumpty falling off the wall and socialism will fail this time as it always does. Obama throwing money at this is like pouring gasoline on fire and expecting it to go out.

    Windsor had over twenty percent unemployment back in the early 80’s and survived. And interest rates were like twenty percent. Much worse than now. President Hopey Changey is destroying what is left of the economy. Should do what Reagan did.

    Look at the history of West and East Germany after the war to see what was the more successful system.

  • avatar
    BDB

    Uh, West Germany was run by the Social Democratic Party. Which is self-described as socialist. The real kind, not the strawman kind (though heavily revisionist).

    http://en.wikipedia.org/wiki/Social_Democratic_Party_of_Germany

    In the real world, there is a middle ground between Stalinism and Anarcho-Capitalism.

  • avatar
    psarhjinian

    Look at the history of West and East Germany after the war to see what was the more successful system.

    West Germany, which is patently socialist—much more so than either the US or Canada were or are—beat out East Germany, which was communist.

    Social democracy wins over ideological purity once again

  • avatar
    bluecon

    Read some history. Read about the German Economic Miracle in West Germany while socialist East Germany turned into a hellhole.(and remains backwards to West Germany to this day)

    West Germany wasn’t rebuilt by socialism but hard work. You are going to soon see the results of Obama’s Keynesian spending and socialist policies and they will not be good results. Time after time the socialists do the same thing and it always ends in failure. Yet they do it again.

    I don’t see West Germany as that much more socialist than the US. If the government wasn’t running Freddie and Fannie and didn’t replace the management at AIG this economic collapse wouldn’t have happened for a few more years.

    Of course Europe has lagged the US for decades.

  • avatar
    BDB

    The German economic miracle involved massive fiscal stimulus and government intervention.

    Unless we’re not talking about some alternate Harry Turtledove history, anyway.

  • avatar
    bluecon

    The German economic miracle required much hard work in a country that was flattened. You didn’t have some Obama type showereing the people with money and things being fixed all by themselves.

    What you like to call socialism is nothing of the sort. East Germany was socialism. In West Germany it was hard work and capitalism. Of course after things got going good what you called socialism began. It is actually the government sucking the money out of capitalism and handing it to the socialists. Much like the lamprey(socialists) latches onto the salmon(capitalism) and goes along for the ride. The problem is you get to many lampreys and you kill the salmon. Which is what the governments have done, sucked the life right out of industry and the economy.

    A lamprey is a parasite and on its own will starve. Which is what is actually now happening to the US government.

  • avatar
    DerKenner

    so that’s what it looks like when this place gets trolled

    good work bluecon


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