GM Canada May Have To Reimburse Ontario For Financial Assistance

June 3, 2008 12:06 p.m. EST

Ontario, Canada (AHN) - Premier Dalton McGuinty is poised to asked General Motors of Canada to reimburse the province part of the $435 million incentives it got from Ontario after GM announced Tuesday the shuttering of its Oshawa plant in 2009.

As a result of the closure, 2,500 Ontario residents would become jobless.

McGuinty said GM Canada probably violated some of the terms of its loan agreement with Ontario. GM Canada officials acknowledged it may partially refund some of the money it received from the province.

Canadian Auto Workers officials said GM's decision to close the Oshawa plant is a betrayal of their new labor agreement it entered into with the union in mid-May. In the deal, GM promised to build its new models of pick-up trucks in Oshawa.

The decline in truck sales caused the closure of GM plants in Canada, the U.S. and Mexico. Each country shutdown would translate into 2,500 lay-offs. Most of the automobiles that were manufactured at the Oshawa plant were gas guzzlers like the Chevrolet Silverado and the GMC Sierra. Demand for these models is expected to drop further as oil prices soar.