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Canada’s federal government seems to have woken up to auto’s importance

Kelly Taylor, Automotive News Canada
November 30th, 2020

A year after Justin Trudeau’s Liberals returned to power with a minority government, Canada’s automotive sector would appear to be giving Ottawa a passing grade for an aggressive approach to a sector too often left to fend for itself.

“There’s no question, we’ve always been critical of the lack of a [national] automotive strategy in Canada,” said Jerry Dias, president of Unifor, which represents Detroit Three factory workers in Canada. “It has always been a misstep, especially considering it’s a $100-billion [a year] industry.”

But Dias credited the Liberals for “aggressively” pursuing auto investment and taking steps to launch Canada into the electric-vehicle era.

“The biggest change is unfolding now. For the first time, we’re watching the federal and provincial governments kick down barriers fast.”

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said having a seat at the table as Ottawa planned its negotiations for the United States-Mexico-Canada Agreement (USMCA) resulted in gains for the Canadian industry and improvements over the former North American Free Trade Agreement.

Volpe pointed to Fiat Chrysler Automobiles’ $1.3-billion investment in its Canadian plants, Ford’s decision to add EV production to its Oakville Assembly plant — facilitated in part by an investment of $295 million each from the federal and Ontario governments — and Toyota’s decision to add the Lexus NX crossover to its Cambridge, Ont., plant as signs that the attention paid to the sector by the federal and Ontario governments is paying off.

As well, General Motors and Unifor reached a tentative agreement that will inject between $1 billion and $1.3 billion to restart vehicle production at the Oshawa assembly plant near Toronto. Vehicle production stopped in 2019, costing 2,300 union jobs. The assembly line, which would build popular light- and heavy-duty pickups, would begin next year.

Under the USMCA, the rules of origin have been tightened. NAFTA required 62.5 per cent regional content; under USMCA it’s 66 per cent in 2020 and rises to 75 per cent by 2023. Also included is a stipulation that the workers involved make at least US $16 an hour.

That, Volpe said, has tilted the continent back to the Great Lakes region, with benefits felt in both Ontario and Michigan.

“I give [government] full credit on renegotiating NAFTA. At all stages, they consulted with industry. We were very intimate with each other throughout that period.”

CREDIT UNIFOR, NOT FEDS

Not everyone is singing praise, however. Brian Masse, an NDP member of Parliament for Windsor-West and the party’s auto-sector critic, said Unifor deserves the lion’s share of credit for recent gains and characterized the federal and provincial governments’ role as merely “not getting in the way, which in itself is an improvement.”

David Adams, CEO of the Global Automakers of Canada, which represents foreign automakers, was critical of the federal government’s moves to push carmakers in Canada toward EVs. The small market, he said, currently means few customers for those made-in-Canada products.

“The EV market is three per cent, and 80 per cent of Canada’s production goes to the United States, so you’ve got to find a market for those zero-emission vehicles,” Adams said. “Would it not be better to let the market develop first?”

Yet he commended Ottawa for its moves in negotiating the continental trade agreement.

“They did an exemplary job of bringing industry to the table,” he said.

A spokesman for the federal Industry Minister Navdeep Bains pointed to the government’s Innovation and Skills Plan. Since 2015, that plan has attracted $10 billion in investment to Canada’s auto sector, said the spokesman, John Power.

In addition, the government is committed to expanding the country’s capacity to build batteries and EV components, Power said.

“The most recent investments announced by Ford and Fiat Chrysler demonstrate that our strategy is attracting the kind of forward-looking investments that position Canada as a leading jurisdiction in building the vehicles of the future,” he said.

WHERE’S THE AUTO STRATEGY?

MP Masse, however, said it was the tough negotiations by Unifor that led to the FCA, Ford and GM announcements. It is also the union that is leading the way to save jobs at the Nemak aluminum plant in Windsor, Ont., which was targeted for shutdown by its Mexico based parent company.

“It’s a little disingenuous for government to be taking credit for gains that have been made on the backs of workers,”he said.

Canada’s sector still lacks a comprehensive auto strategy, Masse said. Work to develop such a plan by Ray Tanguay, former president of Toyota Motor Manufacturing Canada and an adviser to the federal and Ontario provincial governments, has been ignored, the MP said.

Tanguay could not be reached for comment.

Unifor’s Dias, however, said the government’s move to prioritize green and advanced mobility technology shows an interest too often lacking in a sector as important as autos.

“This is the first time we’re having a conversation that’s meaningful, not only in theory,” he said. “Am I pleased? Yes.”

Read full article here.