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Canada keeps wary eye on U.S. auto bailout plans

Canadians are concerned that any U.S. bailout of the auto industry could put the brakes on production in Canada's largest manufacturing sector.

Premier Dalton McGuinty said with Ontario's auto industry already on the skids, President-elect Barack Obama could insist the Big Three automakers pull production out of Canada and Mexico.

"It's likely that Democrats will expect U.S. auto production to be protected in exchange for a bailout," McGuinty said.

Federal Finance Minister Jim Flaherty said Canada's auto industry must come up with a solid plan for the future if it wants federal funding.

"Nobody wants to see taxpayers' money taken — and then, in effect, wasted — where a company is not going to survive," he said.

The government is looking for automakers to create a "plan for survivability" that would move toward making technologically sophisticated cars such as fuel-efficient hybrids.

The government already has a $250-million (Canadian) automotive innovation fund to spur research and development, Flaherty said.

Nortel worries

Canada's once-mighty telecommunications giant Nortel Networks Corp. could be headed toward bankruptcy, said Mark Sue, an RBC Capital Markets analyst.

The company's share-price target could drop to zero from its record low of 65 cents (Canadian) last Wednesday, he said, noting the peak was $124.50 in 2000.

Although Nortel has $2.65-billion (U.S.), it is "overwhelmed with debt and could run out of cash before $1-billion (U.S.) in bonds mature in 2011, he added.

Meanwhile, CanWest Global Communications Corp. will cut 560 jobs, about 5 percent of its workforce, because of economic conditions and a loss of $1-billion (Canadian) in the last quarter.

CanWest, based in Winnipeg, publishes the National Post and other major dailies and has TV and Internet interests worldwide. Its shares have plunged to 72 cents (Canadian).

News in brief

• Canadian banks received another assist as the federal government invested $50-billion (Canadian) to buy mortgages on top of $25-billion given last month. The action is intended to provide financial institutions with "significant and stable access to longer-term funding," Finance Minister Jim Flaherty said.

• Canada is trying to cope with a record number of refugees from Mexico and Haiti. The government wants to stem the costly influx, with 17,200 Mexicans and Haitians awaiting immigration hearings that could take up to a year. While they wait, the arrivals are eligible for housing, health and social services benefits.

• Thieves made off with a safe containing jewels valued at more than $1-million (Canadian) from the Toronto home of Paul and Judy Bronfman. Among the items taken were two 1970s Stanley Cup hockey championship rings from when the Bronfman family owned the Montreal Canadiens, precious stones and jewels including a flawless six-carat diamond.

Facts and figures

Lower oil and commodity prices knocked the value of Canada's dollar down to 81.36 cents U.S. on Friday while the U.S. greenback returned $1.2291 Canadian.

The Bank of Canada's key interest rate is unchanged at 2.25 percent while the prime lending rate is 4 percent.

Stock markets were again lower, with the Toronto exchange at 9,095 points and the TSX Venture index 801 points on Friday.

Lotto 6-49: (Wednesday) 12, 30, 34, 38, 39,d 43; bonus 36. (Nov. 8) 2, 3, 19, 28, 36, 45; bonus 39. Super 7: (Nov. 7) 5, 7, 8, 27, 42, 44, 46; bonus 6.

Regional briefs

• Another athletic shoe containing a severed foot has been found along British Columbia's Fraser River. The shoe and foot found near Richmond is the seventh picked up along the coast from the Georgia Strait to the northwestern tip of Washington State since August 2007. So far, authorities are baffled by the discoveries.

• Shortages of winter tires are reported in Quebec as the province plans to enact a mandatory snow-tire law as a safety measure on Dec. 15. Industry projections estimate the province, where most drivers already routinely switch to snow tires, needs an extra 2-million tires this winter.

• Sotheby's has auctioned a map of Eastern Canada drawn by French explorer Samuel de Champlain for $286,570 (Canadian), three times its estimated price. An unnamed private collector picked up the rare map. It shows the St. Lawrence River and Eastern Canada, including what is now Newfoundland, and was drawn in 1612.

Jim Fox can be reached at

Canada keeps wary eye on U.S. auto bailout plans 11/15/08 [Last modified: Thursday, November 4, 2010 9:42am]
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