Government Always Gets Paid: GM to Pay Back Cash that Funded Canadian Production

A bill for the assembly of two decades-old models — one from a defunct marque — will come due on April 1. And unlike much of the debts written off during General Motors’ bankruptcy, a major subsidiary now has to pay this chunk back.

The money, $220 million in all, was handed to GM Canada back in 1987 to save the Montreal-area Sainte-Thérèse Assembly plant. GM Canada used that bankroll to build the stunningly sexy Chevrolet Celebrity and Oldsmobile Cutlass Ciera. It later cranked out the last Pontiac Firebirds and fourth-generation Chevrolet Camaros.

The thing about 30-year interest-free loans is that someone eventually comes to collect.

Unlike its parent company, outstanding loans held by GM Canada prior to 2009 are still active. During GM’s bankruptcy, its Canadian division slashed its workforce and dealer network in a desperate effort to reduce costs. Things improved, but media north of the border soon began asking questions about taxpayer cash handed out long ago.

GM Canada still intended to repay the $220 million offered up by the Canadian and Quebec government, the company said in 2011. The plant, of course, no longer existed, having been torn down and the land since turned into a big-box retail mall.

Sainte-Thérèse Assembly opened in 1965, building Chevrolet Biscaynes before moving on to H- and G-body vehicles in the 1970s and ’80s. When poor quality and labor strife threatened to shutter the facility, the federal and provincial government intervened. Each offered $110 million. It was then decided the plant should be retooled to build Chevrolet Celebrity and Oldsmobile Cutlass Ciera models. After that, another reprieve — Camaro and Firebird production ran from 1993 to 2002.

After that, GM left Quebec.

Following the most recent round of labor negotiations, GM pledged $554 million for its Canadian operations. While the possibility of government cash arose, last month GM said it wasn’t necessary for the projects it had in mind. While discussing the matter with the Globe and Mail, GM Canada president Stephen Carlisle claimed the company would indeed pay back the loan on its due date — April 1, 2017.

The payment comes at an opportune time for Canada, which just pledged an interest-free loan to another crucial Montreal-area business apparently in need of propping up.

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