CAW Warns of Economic Chaos if Automakers Allowed to Collapse

December 12, 2008, 2:00 PM EST

SocialTwist Tell-a-Friend

CAW leaders reacted strongly today to the U.S. Senate's decision to abandon a financial lifeline for the North American automakers, warning of very dangerous economic consequences if one or more of the companies collapse.

"This is not the time for politicians to play games, point fingers, or invent scapegoats," said Ken Lewenza, President of the Canadian Auto Workers.  "Millions of Americans and Canadians depend on this industry for their livelihood, and we must focus on keeping it in business."

Lewenza called on U.S. President George Bush to utilize a portion of already-approved financial restructuring funds ($700 billion approved earlier this year by the U.S. Congress) to keep the domestic automakers operating until the new administration takes office.  He also called on the Canadian federal government to approve a proportional financial package, conditional on eventual approval of a U.S. plan, to keep the Canadian subsidiaries of the automakers operating for the next several months.

"Obviously, Canada cannot save these global companies on our own," Lewenza said.  "But we can help to break the U.S. logjam by acknowledging the gravity of the situation, and indicating our willingness to do a fair share of the heavy lifting."

"The Canadian government has a responsibility to use its power to secure Canadian facilities and jobs. We cannot afford to be passive, while other governments around the world are acting."

Lewenza pointed out that the pro-active approval of proportional support from the Canadian government (contingent on U.S. support) would demonstrate to U.S. lawmakers that their actions will in fact be matched by other governments.

Lewenza emphasized that a financial lifeline for the auto companies is not a "bailout," and need not involve any burden to taxpayers.  He called on Ottawa to mobilize exactly the same measures (loan guarantees, short-term credit, and asset swaps) as have been utilized to deliver over $150 billion in federal support to Canadian banks since September.

"Supporting our banking system is important," said Lewenza.  "But supporting our real economy is just as important."

Lewenza stressed the importance of quickly addressing the impacts of the credit freeze on the auto market.  The Big Three's financing arms (including in Canada) have been forced to cut back lending, and virtually eliminate leasing, as a result of the credit freeze, and this is deeply damaging the automakers.  "We cannot allow this crisis in private finance to permanently destroy a crucial pillar of our long-run prosperity," Lewenza said, urging the federal government and the Bank of Canada to act immediately to support new car lending in Canada.

Lewenza also warned of the dire consequences, including for governments, of the collapse of one or more of the automakers.  Economic studies suggest that Canadian governments would lose over $10 billion per year in tax revenues if the industry ceased to operate.

Lewenza sharply criticized the Republican demand that unionized autoworkers must cut their wages to the levels paid in non-union factories in Mississippi and Alabama.   "The politicians are trying to make autoworkers take the blame for a much larger failure of public policy in North America."

"Some of those politicians actually want the Big Three to fail, on the false hope that their states could get more jobs. Then they have the gall to blame the UAW, which has been working harder than anyone else to save American jobs."

Cutting wages to match non-union plants in the U.S. deep south would have no impact whatsoever on the Big Three's survival, Lewenza said, which depends on a recovery in financial conditions and auto sales.

Canadian auto plants have a substantial cost advantage relative to other industrialized auto producers, thanks both to lower hourly labour costs and superior productivity.  Lewenza reiterated the CAW's commitment to maintaining and protecting that cost advantage.

Print Print  Send to a friend Send to a friend  Feedback Feedback