* Gov't to extend Automotive Innovation Fund for five years
* Companies must invest own funds to tap gov't support
* Auto workers union welcomes support but says more needed
* Canada PM says won't be influenced by U.S. sale of GM
By Cameron French
OAKVILLE, Ontario, Jan 4 Canadian Prime Minister
Stephen Harper unveiled C$250 million ($253.69 million) in
government support for the country's auto industry on Friday as
Ottawa tries to lure investment to the shrunken sector and
Harper announced a five-year extension and new funds for the
Automotive Innovation Fund, which was set up in 2008 with an
initial C$250 million of government money for research and
development projects in Canada's auto industry.
"Our goal in creating this fund was to promote and secure
more high quality manufacturing jobs for Canadian workers in
this industry through innovation," Harper said, speaking at an
event at the Ford Motor Co. assembly plant in Oakville,
In order for companies to be considered for the funds, they
need to make auto sector investments of more than C$75 million.
The government said its support to date has leveraged up to
C$1.6 billion in industry investment.
Companies who have made use of the fund include Ford Motor
Co of Canada, Linamar Corp., Toyota Motor
Manufacturing of Canada and Magna International
The government subsidy comes as the industry is still
reeling from General Motors Co's announcement last month
that it will produce the next generation of its Chevrolet Camaro
in Lansing, Michigan, instead of at GM's Canadian production hub
in Oshawa, Ontario, where it currently produces the sports car.
Canadian Auto Workers union president Ken Lewenza welcomed
the government support for the auto industry, but said Canada
needed to do more to match the level of incentives offered by
other countries and certain U.S. states.
"I'm very grateful for the fact that they established the
fund, but I still think we have to take a look at a longer term
approach to how do we sustain it long term, because what we know
is investment comes and goes," Lewenza told reporters at the
According to the CAW, Canada was the fourth largest auto
producing jurisdiction in the world in 1999. A decade later, hit
by a range of factors including a soaring Canadian dollar, which
hiked manufacturing costs, Canada has fallen out of the top 10
and the number of industry jobs has shrunk by a third.
CANADA IN NO RUSH TO SELL GM STAKE
Separately, Harper said the Canadian government does not
intend to keep its stake in General Motors Corp over the
long term, but it will not be influenced by the United States on
when to sell.
The governments of Canada and Ontario, the heartland of the
country's auto sector, became shareholders of GM in 2009 when
they contributed a combined C$10.8 billion to a bailout to keep
GM afloat. The U.S. government provided about $50 billion.
Canada and Ontario's combined stake in GM is equal to about
"We are not bound by what the United States decides," Harper
said. "We'll sell in a way that attempts to maximize the value
for the Canadian taxpayer."
The U.S. Treasury said on Dec. 19 that it plans to sell its
entire stake in GM over 15 months, all but assuring a
multibillion dollar loss.
Analysts have said Canada is under no fiscal pressure to
sell its GM stake soon and may hold onto it until after the
country's next general election, scheduled for 2015.
In return for their investment in GM, the Canadian
governments required that the automaker maintain its share of
production in Canada for several years moving forward.
Canadian Industry Minister Christian Paradis said last month
that he was "concerned" about GM's decision to move its Camaro
production and that Ottawa would hold the Detroit automaker to
the commitments it made when Canada and Ontario invested in it.