OTTAWA — Moving to pre-empt a possible shift of auto production to the United States, the governments of Canada and its Ontario province offered the industry 4 billion Canadian dollars in emergency loans on Saturday.
Depending on currency fluctuations, the amount is roughly equal to 20 percent of the Bush administration’s bailout plan as well as Canada’s portion of North American auto production.
“I will not fool you,” Prime Minister Stephen Harper told reporters in Toronto. “There is obviously money at risk here and there may well be more money at risk going forward.”
But, in words echoed by Dalton McGuinty, the premier of Ontario, Mr. Harper said that a collapse of the auto industry would create “a huge problem” for the Canadian economy.
“There are literally across the country hundreds of thousands, if not millions, of potentially affected families by the distress of this industry,” Mr. Harper said.
The Canadian auto industry, which exports about 90 percent of its production, accounts for a greater percentage of Canada’s manufacturing economy than its parent companies contribute to that of the United States.
Many American and Japanese automakers operate factories in Ontario, and so do parts makers that feed plants throughout North America.
A loss of the American manufacturers would be a particularly severe blow to Ontario, the most populous province and the home to all of Canada’s auto assembly plants. About 400,000 people in Ontario work in the industry, Mr. McGuinty said.
In addition to the loans, Mr. Harper announced that the government would extend additional insurance to auto parts makers for money owed to them by automakers, and develop a program to finance consumer loans for new car purchases.
The prime minister suggested that the consumer loan program would also apply to buyers of cars made by Honda and Toyota, companies with extensive operations in Ontario.
“We don’t want a package that simply helps the Detroit Three,” Mr. Harper said.
Unlike the $17.4 billion package announced by President Bush, the Canadian plan, roughly $3.3 billion, is remarkably short on detail, at least publicly. An official who spoke on the condition he not be identified, following Canadian custom, said many of the terms were still being negotiated with the automakers.
Perhaps the biggest uncertainty hangs over the status of labor agreements between the car companies and the Canadian Auto Workers Union. While Mr. Harper spoke broadly about the need for workers “to be part of the solution,” his plan makes no specific demands on the unions.
During the last round of contract talks, the Canadian union rejected a wage system adopted by the United Auto Workers that places new workers on a lower wage scale.
Some industry analysts argue that unionized Canadian workers are now significantly more expensive to employ than their American counterparts. But the government official said that several factors, including public health care, differences in pension systems and currency exchange rates, made it difficult to draw that conclusion.
After the announcement, the president of the Canadian Auto Workers, Ken Lewenza, again rejected suggestions that wages and benefits needed to be reduced.
“This has nothing to do with auto workers’ wages in the United States and Canada,” Mr. Lewenza said during a conference call with reporters. He added that concessions made by the union during the last round of contract talks had left the Canadian industry in a competitive position.
But Mark Meldrum, a business professor at the University of Windsor, based in a city in Ontario that is particularly dependent on auto jobs, said the Canadian union would probably match any concessions offered by the U.A.W. in the United States.
“That will be held up as the yardstick,” he said. “There has to be wage concessions.”
Both the prime minister and the premier said a central condition for Canadian assistance would be commitments from the automakers to maintain Canada’s 20 percent share of continental production.
Because the governments’ only method of enforcement will be refusing to roll over the loans, Professor Meldrum was skeptical about Canada’s ability to police that, or any other, condition.
“Canada cannot save the industry,” he said. “Canada can only help save the industry.”
In a brief statement, Chrysler Canada, which is based in Windsor, Ontario, welcomed the government’s offer.
John Gray, the mayor of Oshawa, Ontario, which is the hometown of General Motors of Canada, was more effusive in his praise. “Hallelujah!” he told the Canadian Broadcasting Corporation minutes after the announcement. “It’s lifted that cloud which has been hanging over our head.”
The decision to provide aid is the latest step in a long change by Mr. Harper’s Conservative government. Until this fall, it had regularly dismissed suggestions that the federal government had any role to play in assisting the auto industry. But before October’s election, it broke with that by promising to help finance the reopening of a Ford engine plant in Windsor, Ontario.
Under the Canadian plan, General Motors will receive 3 billion Canadian dollars with the balance going to Chrysler. Ford has asked Canada only for a line of credit and is not participating.
