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OSHAWA -- Talks between federal government officials and automakers are ongoing, in the wake of even more local auto industry lay-offs.

"It's clear that the Detroit Three are having a lot of challenges, short-term challenges certainly, but the discussions that are taking place are aimed at looking at long-term survive-ability," Minister of Finance Jim Flaherty said. "It's a situation that's changing day by day and our government's watching with a careful eye."

There have been talks between Minister of Industry Tony Clement and the CEOs of the three North American automakers, Mr. Flaherty said.

The federal government is "monitoring the situation" Mr. Flaherty said in pointing out that the U.S. has not committed to a bailout situation for industry there either.

"In terms of protecting Canadian interests obviously any support that might be considered by the government of Canada would be for the purpose of preserving jobs and helping the economy in Canada."

On Friday General Motors announced layoffs at 10 North American plants, including 500 layoffs at Oshawa's car plant.

Calling it a dark day for Oshawa, Chris Buckley, president of Local 222 of the Canadian Auto Workers, said this is the worst time in the history of the auto industry.

"I am absolutely scared on behalf of my members," he said.

GM lost $2.5 billion in the third quarter, the company's financial report revealed Friday morning. The report also warns that the automaker's liquidity in 2008 "will approach the minimum amount necessary to operate its business."

As a result, 10 plants in North America will slow production. One of those plants will be the Oshawa car plant and the other nine will be in the U.S.

The local car plant produces the Impala and the Buick Allure/LaCrosse. The plant will produce fewer Impalas per hour, which will result in 500 layoffs as of Jan. 1, 2009. These layoffs are temporary and based on market conditions, said GM Canada spokesman Stew Low.

Production of the LaCrosse/Allure was previously scheduled to end Dec. 23. This was announced earlier in the year and will result in 400 fewer jobs in the plant. Those jobs have been accommodated through retirement incentives and buyouts, Mr. Low said.

In all, the plant, which produces 66 vehicles per hour, will soon produce 45 per hour, resulting in the need for fewer workers.

The job reductions are scary, Mr. Buckley said.

Liquidity is now GM'S top priority, GM CEO Rick Wagoner said Friday.

For weeks, rumours had been circulating that the automaker was in talks to acquire Chrysler.

Mr. Wagoner said a potential strategic acquisition by GM that had recently received a lot of attention was now being shelved.

"We've concluded at this particular time that it's important that we put 100 per cent of our efforts on the immediate liquidity challenges and so, accordingly, we've set aside consideration of such a transaction as a near term priority," Mr. Wagoner said at a news conference.

The union wants the federal government to react to the situation, to look at trade policies and consider helping the industry, Mr. Buckley said.

"It makes me absolutely sick to my stomach," he said. "It makes no sense that they're funnelling billions of dollars into financial institutions when the biggest part of our economy here in Canada is bleeding funds and bleeding good-paying jobs."

In calling for help from the federal government, Mr. Buckley said it's not just an issue for Ottawa but the U.S. government as well.

"They have to pay attention to the decline in the auto industry or it's going to evaporate from North America."

Mr. Flaherty said the government is watching the "fluid" situation with the auto industry and it will be on the automakers to prove they have a solid plan for surviving long term.

"They need to be able to have a business plan that will demonstrate that they will be able to produce vehicles that people are going to want to buy," he said.