Reid Bigland, the man trying to steer Chrysler Canada out of a financial ditch, wants you to know he doesn't think government aid is a free ride. Not at all. So he's happy to show up in Ottawa on a chilly winter day to answer questions, as he did this week, because, as he put it: "Obviously, you're not going to loan out a billion dollars on the back of a cigarette pack."
Obviously. But how about $3-billion?
We now know what the Great Automotive Bailout is going to cost. At least, we think we do. Chrysler's plea for $3-billion, when added to GM Canada's $7-billion, makes it $10-billion to help save the two companies, with the lion's share of the cost to be picked up by the feds. That's up from $4-billion a few months ago.
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You know the saying: A billion here, a billion there, and pretty soon you're talking about real money. Even in Ottawa. Ten billion dollars would pay for more than half of Canada's annual defence budget. It's more than enough to provide six months of employment insurance benefits for each of the country's 1.4 million unemployed. It's roughly equal to the amount of income tax paid by all residents of Manitoba and Saskatchewan, where there are no car plants.
A $10-billion loan demands a pretty serious debate, in other words. What rationale exists for using the money to protect the jobs of auto workers who make $34 an hour instead of, say, spending it to feed poor kids (or, for that matter, investing it in a growth industry, like tech)? There's only one reason, and that's the prospect of a payoff. If Chrysler and GM can be saved in Canada, the jobs will stay and the companies might pay the money back. Just give us a few years, the companies say, and taxpayers will start getting a return, with 5 to 6 per cent interest. "We're not looking for free money," Mr. Bigland told a parliamentary committee.
Chrysler is even pinpointing the year in which it will start to repay: 2012. A lot has to go right between now and then. The credit markets must thaw and it has to become easier to get a loan. American consumers, though still constrained by too much debt, have to start buying again. Most important, the Bailout Two have to make cars people want, and stop bleeding market share in the United States. (GM and Chrysler export more than 85 per cent of their Canadian production across the border.)
The risks are large and real. But worry not, say the auto makers. We have good plans! We'll be viable! Behind the scenes, the companies say they are sharing copious amounts of information with both Ottawa and Queen's Park. Teams of civil servants are going over sales and profit projections, apparently. The problem is that it's not the civil servants' call. The bailout is a political decision and, in Ottawa at least, most MPs are in the dark on what the auto makers' plans look like. "Not being at the table means we do not have the information," says Martha Hall Findlay, a Liberal MP from Toronto.
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She has been trying to scrape together what data she can. On Wednesday night, after Mr. Bigland and Chrysler LLC president Thomas LaSorda made their pitch to the politicians - complete with threat to withdraw from Canada if they don't get the loan - Ms. Hall Findlay put her hand up. How much cash is Chrysler Canada burning right now, she wondered. "We don't break it out in that level of detail for Canada," Mr. Bigland answered. "It is a pretty intense burn rate."
She tried again: If the government lends you this much money, how long would it last, given the current rate at which cash is flowing out of the company? She got nowhere.
But that's no great surprise. The public portion of Chrysler Canada's submission to the feds and Ontario consists of a four-page letter. It could have been written - sorry, Mr. Bigland - on the back of a cigarette pack. GM Canada's letter is about 60 pages, but the substance is pretty thin. The company tells us that it uses 13 suppliers in Newmarket, Ont., but won't even say what its Canadian revenues are. "It's fluff," says one person in Ottawa who has studied the document.
The auto makers' attitude is: We're private companies. The real detail, the financial stuff, is private. Well, it was. But when they come looking for $10-billion - about $600 for every person in Canada who pays income tax - they've turned their financial woes into a public problem. "This issue is huge," says Ms. Hall Findlay, and she's right: So huge that the public and Parliament shouldn't be making up their minds about it in a near-vacuum.
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"We're motivated to receive the money," Mr. Bigland told the committee. Yes - far more motivated that the average Canadian is to give it to them. Do Chrysler and GM want to halt the backlash against the bailout? Then enough of the platitudes and threats. Stop telling us you'll be viable. Prove it.