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Auto-Parts Firms in Canada appeal for $400 Million
Jan 02, 2008

Auto part companies in Canada are asking for $400 Million as emergency loan to buy equipment to increase productivity. Canadian auto industry is facing a setback due to accretion in the loonie.
 
As per McGuinty Ontario premier Dalton, auto part companies in Canada are asking for an emergency loan of $400 Million to the federal and Ontario governments. They say that the appreciated Canadian dollar has made it complicated to compete with the global market. This loan would be used to buy essential equipment to increase productivity, as reported by Canadianpress.
 
Increase of the loonie from the low 60s to over US$1 has played a tremendous role in increasing the woes of part makers. This isn’t the only reason why the industry is at a stand still. Increased commodity prices are also affecting part makers along with the declining availability of trouble-free credit.
 
Many financial institutions are also not providing loan facilities. As per these institutions, they cannot take the risk of financing an industry that is already dwindling. Small to medium companies will be affected the most by reduced access to capital as commonly bigger part manufacturing companies’ posses their own sources of finance.
 
Automotive industry in Canada that provides employment to more than 80,000 people in Ontario and Quebec anticipates that some 21,000 jobs have been lost in the last three years (2004-2007) because Big Three carmakers (Chrysler LLC, Ford Motor Co. and General Motors Corp.) have reduced production as part of production level restructuring in Canada.
 
Some amount of struggle has been observed by the Canadian automobile industry with the prices, as car and truck costs at various Canadian dealerships have come down drastically for the first time ever in just a decade as manufacturers attract buyers with cash refunds and other means of transactional treats. Prices are dropping even more as carmakers were compelled to encourage the perception that consumers are paying more for vehicles here as compared to the US. Chrysler Canada and many others are currently contributing cash discounts of up to $10,000 on chosen models to attract buyers. Some manufacturers are also offering lesser pricing on all-new 2008 models.
 
A Senior Research Analyst at RNCOS says, “The auto industry in Canada is undergoing sufferings at both the production and price cut front. The high Canadian dollar has limited the consumer spending power. Auto manufacturers should now consider launching only attractive models of vehicles so that they can draw the attention of consumers because the growing Canadian economy cannot be checked.”

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