Ottawa to continue talks with automakers despite U.S. bailout failure

Despite the defeat of the automotive bailout package in the U.S. Senate, the Canadian federal government will continue to hold talks on possible aid to the Canadian subsidiaries of General Motors, Ford and Chrysler, says federal Finance Minister Jim Flaherty.

Flaherty described the situation as changing daily and noted that there is still change to come in the U.S. administration next month, when Barack Obama becomes president.

We'll continue to stay close to the situation there and continue the discussions with the industry here,'' Flaherty said after a speech to the Saint John Board of Trade.

The Detroit Three automakers are seeking a total of $6.8 billion in loans and credit lines from Ottawa and Ontario, saying they need some of that money before the end of the year as they struggle with a worsening economy.

This is an ongoing issue,'' Flaherty said. ``This is an important sector clearly in the Canadian economy, not only the Detroit Three, but also the very important parts sector in Canada.

Canada has some of the major players in the world in automotive parts. The minister of industry, Tony Clement, has been having discussions with the industry and has been working on a made-in-Canada plan and our government is open to helping the industry''.

On Friday, the White House said it will consider using the Wall Street bailout fund to prevent the U.S. auto industry from collapsing after the Senate refused to pass a US$14 billion rescue bill endorsed by President Bush and congressional Democrats.

Senators who voted against the bailout package cited the refusal of the United Auto Workers union to accept wage and pension benefit cuts for their rejection of the plan.

In another development Friday, Japanese automaker Honda Motor Co. said it is cutting more production in North America as it adjusts to lower demand but does not plan any layoffs in Canada.

Honda Canada spokesman Richard Jacobs said production at the company's plants in Alliston, Ont., will be reduced by 37,000 units between now and the end of the fiscal year on March 31.

But he said none of the company's 4,600 employees in the central Ontario community where Honda makes Civics and Acura sedans and minivans will be affected.

Honda is lowering production by another 119,000 vehicles, bringing anticipated production for its fiscal year ending March 31 to 1.3 million cars and light trucks.

The company _ which builds cars and parts in eight plants in the U.S., Canada and Mexico _ has already has cut production by 56,000 units this fiscal year.