Ontario is fighting to save its automotive sector, which is a cornerstone of the Canadian province’s economy and is heavily reliant on investment from Detroit’s floundering ‘big three’ automakers.

The sector contributes C$28bn ($22.7bn) to the province’s economy, employs 400,000 Ontarians and accounts for nearly a quarter of manufacturing exports. More

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than 90% of Canada’s total auto industry is located in Ontario, and all Canadian-built cars and light trucks are manufactured in the province. About 85% of finished vehicles built in Ontario are exported to the US.

Canada’s federal and provincial governments have pledged C$4bn in bailout funds for the Canadian units of General Motors and Chrysler, two large investors in Ontario that employ 12,000 and 9400 people, respectively.

“We are working together with the federal government to figure out the best way for us to try to help with the reorganisation of the industry here – understanding it is fully integrated with the US and now it is extending to Mexico – and trying to find a foundation on which to build,” Ontario premier Dalton McGuinty told fDi in a meeting at his Toronto offices.

“We have 400,000 jobs here at stake and what we need to do now is work with the industry to see how we can reshape it. It is going to be difficult. We have lost some jobs, we have lost some shifts. So far, we have managed to hang on to our manufacturing plants and we want to work with the industry to help them pursue a transformation.”

The premier expressed optimism that the sector would survive the ill winds blowing from Detroit: “We have millions and millions of North Americans who are going to continue to buy cars on an annual basis. We are the number one producer of cars in North America – why would we give that up just because the going gets tough?”

In March the Canadian Auto Workers union approved a deal with General Motors for cost-cutting concessions at GM’s Ontario operations in Oshawa, St Catharines, Woodstock and Windsor, which the company has said will save it nearly C$1bn in future labour costs. Arturo Elias, president of GM Canada, said the company’s restructuring plan would see it keep 17% to 20% of its North American production in Canada.