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Canada's automotive parts industry on Tuesday asked the government to lend it short term cash to ride out a credit crunch and a sales slump not seen since the 1980s, but was turned down.

"Assistance is required immediately if our country has any hope of salvaging a once-vibrant and prosperous industry that is experiencing a temporary but very serious financial crisis,"

Gerry Fedchun, president of the Automotive Parts Manufacturers Association of Canada, said in a letter to federal Industry Minister Jim Prentice and Finance Minister Jim Flaherty, as well as Ontario Finance Minister Dwight Duncan. A copy of the letter was obtained by Agence France- Presse. "Lack of profitability has been with us for two years already and many companies have exhausted their lines of credit," he said.

Prentice responded that he would not offer firms any new funds beyond two billion dollars (US$1.57 billion) made available last week to all Canadian exporters, including auto parts makers. Fedchun, who noted a recovery in the "cyclical" car industry is predicted to be at least 18 months away, heads the Canadian association representing parts suppliers to Ford, Chrysler, General Motors, Toyota and Honda. He told the daily Globe and Mail the amount of money needed in short term loans could be as much as one billion dollars (US$770 million).

His call for action is supported by the Canadian Vehicle Manufacturers Association, which represents Chrysler, Ford and General Motors, and by GM Canada itself, the newspaper said. Prentice told AFP the government had authorized an additional two billion dollars of credit for Canadian exporters last week, including the automotive sector, through its agency Export Development Canada (EDC).

As well, Ottawa took steps to ensure the Business Development Bank of Canada (BDC) has "additional credit" to offer small and medium-sized Canadian businesses, he said. "So, what the parts manufacturers have been requesting, we've already in fact moved on in terms of easing the credit circumstances that they're facing," Prentice said in an interview with AFP, adding a firm "no" to any additional outlays. The industry minister however did not say what portion of the amount already earmarked would be specifically made available to auto parts manufacturers. Fedchun also asked the government to make research and development tax credits refundable so that "companies that are presently without taxable income can see an immediate benefit."

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