Subcommittee on the Automotive Industry in Canada Committee on March 11th, 2009

[Reid Bigland]

Twenty-five percent of $9 billion gets to about $2.3 billion.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Yes, if $9 billion was the total, but if the total is actually $11.3 billion...?

[Reid Bigland]

I'm sorry, of the total requested of the U.S. Treasury. The total requested of U.S. Treasury is $9 billion, and we're looking for a proportionate amount from the Canadian government, so 25% of $9 billion is how we're looking at it.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Lake and Mr. Bigland.

Mr. Comartin.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you for being here.

I just want to clear up one point in terms of Mr. Lake's last question. The $2.3 billion, is that in U.S. funds?

[Reid Bigland]

We would prefer it to be in U.S. funds.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Is that what the request is?

[Reid Bigland]

Our original request was in U.S. funds.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Do you know, with the current rate of exchange, what that would be in Canadian?

[Reid Bigland]

I think the current rate of exchange is about 80¢, so 20% deducted off that, give or take one-sixth; and what has been pledged by the Canadian government is $1 billion Canadian, or approximately $800 million U.S.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

In terms of your current status in the negotiations with the U.S. government, I know you've been criticized by the minister here for not giving enough detail about the Canadian situation. Have you had a similar criticism in the U.S., that you haven't provided enough information?

[Thomas LaSorda]

No, no criticism from the U.S. treasury department.

By the way, in Canada—Reid can talk about it—the request for information is roughly four to five times the amount the U.S. treasury department asked for.

[Reid Bigland]

That's correct. Our submission here in Canada was to try to impress upon the Canadian and Ontario governments that we're very much an integrated organization with our U.S. parent. Frankly, without the U.S. operations functioning, Canada wouldn't exist. We do not have a unique Fiat arrangement for Canada; we're very much dependent upon the U.S. market for our production. As I've stated, 85% of our production is exported to the U.S. and 60% of our sales originate from the United States market, of the product we sell here in Canada.

So our plan was very much integrated with our U.S. plan. As to the impact on our Canadian operations and our plans for the Canadian operations in excess of $1.2 billion of investment, we have communicated that to the Canadian government. We have also communicated the unique concessions we've received from Canadian stakeholders, such as the concessions we've received from our dealer organization.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. LaSorda, at the present time, is there any additional information Treasury is asking for in the United States?

[Thomas LaSorda]

We met with them on Monday in Warren, Michigan, with the task force. As of that day, we're totally up to date on all information and all questions have been answered.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Where are we at regarding timelines for a decision from Treasury in the U.S.?

[Thomas LaSorda]

I wish I could answer that. We asked that very question. We've told them the end of March is when we'd like the decision, but they have not confirmed the actual day on which they will provide that decision. We've been pushing for March 31 or earlier.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

And are we looking at the same timelines on the Canadian side?

[Reid Bigland]

It's difficult to predict. We've been in discussions with the Canadian and the Ontario governments since late last fall, and we're continuing to work through a loan agreement that is upwards of 80 pages now on different terms and conditions. We're motivated, and I believe the Canadian and Ontario governments are motivated as well, to align the terms and conditions with the U.S. treasury department loan. Those are a number of things we're working through, and in the meantime we're continuing to provide them with information as to our long-term viability plans.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

So is Canada's minister here still looking for more information from you?

[Reid Bigland]

We've been providing information solidly since December. There were 10 Canadian government representatives, in essence, camped out at Chrysler Canada and Chrysler U.S. for the better part of six weeks. We are continuing to provide information on an ongoing basis, on a weekly basis, to both the Canadian and the Ontario governments.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Is it your sense then—since that's not a direct answer—that in any way the lack of information would impede meeting the deadline of the end of the month?

[Reid Bigland]

I sure hope not, because we feel pretty comfortable in being able to provide all the information they have requested throughout this process. In fairness to them, they're looking out for the best interests of the taxpayers, and obviously you're not going to lend out a billion dollars on the back of a cigarette pack. So in fairness to the Canadian and Ontario governments, it is a complicated process with which to lend the money when the time comes.

But we're motivated to receive the money. It's important, as Tom laid out, that we get our conditions in the Canadian marketplace right or it's going to negate a lot of the benefit of receiving those funds.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. LaSorda, when you're carrying on negotiations with the U.S., the experience Chrysler had in the early 1980s of seeking and receiving very large loan guarantees, is that entering into the picture at all in terms of giving the government on that side of the border any assurances you'll be able to carry through on repayment?

Mr. Bigland, you could answer this as well, about this side of the border.

[Thomas LaSorda]

Well, the viability plan we submitted is under the most detailed scrutiny of the U.S. treasury department. They've hired outside consultants, bankers, and everyone is going through all the numbers. We've been continually providing them data. The issue is that we have a viability plan. We've proven it and submitted it for short term and long term. The Fiat transaction just improves that viability as we go forward, and we believe the U.S. treasury department thinks it's a pretty good marriage between the two entities.

So yes, we believe we've submitted a viability plan for the future of our company with the support of Canada. As you probably remember, in the early 1980s the Canadian government was there to support us. We did return the money with a nice interest payment as well.