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DOUG SCHMIDT, WINDSOR STAR
Published September 28th, 2017
Despite few details being made public so far, domestic auto sector players and observers appear much more upbeat on the NAFTA renegotiation effort that wrapped up its third round of talks in Ottawa Wednesday.
“We’re not worried,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
That was the message he and a handful of other automotive sector executives delivered at a meeting with Foreign Affairs Minister Chrystia Freeland and Innovation, Science and Economic Development Minister Navdeep Bains on the eve of the latest round of NAFTA talks.
Following a period of auto industry nervousness when freshly elected U.S. President Donald Trump vowed to tear up the trilateral free-trade agreement, Canada’s auto sector and its politicians appear to be satisfied now that the new U.S. government at least understands the importance of cross-border integration within North America’s most important manufacturing sector.
The Trump administration recognizes that “America First hurts American interests and American corporate investments,” said Volpe, adding the types of big investments made by the automotive sector in Canada, the U.S. and Mexico are both expensive and meant for the long term.
Shortly after Trump’s inauguration, Volpe said members of his association, an important part of which is centred in the Windsor area, were “nervous” about the sudden uncertainty within “the world’s most integrated supply chain.”
The feeling now? “We’re slightly positive,” said Volpe.
Bains said he’s been getting positive feedback from industry sources. Piggybacking off a meeting in Turin, Italy, this week with his counterparts among the G7 group of economically powerful nations, the minister said he met with automotive company executives, including Fiat Chrysler Automobiles CEO Sergio Marchionne.
With the new CETA trade deal between Canada and the European Union, as well as a more “inward-looking” political approach by Trump in the U.S., Bains said the Liberals are touting Canada’s openness and increased opportunities for global investment.
“While others are building walls, we’re opening doors,” said Bains. He said his message to the G7 and to industry leaders is that Canada’s promotion of diversity, its immigration strategy focused on newcomers with skills and its emphasis on “strategic innovation,” all present opportunities for global investors.
“There’s probably room for optimism,” said Tony Faria of the Office of Automotive and Vehicle Research at the University of Windsor’s Odette School of Business.
“In respect to auto investment, the conversations were very positive,” said Bains.
The close to $2.6 billion in new investment announced recently by the Detroit Three auto companies “speaks volumes to how important Canada is — that bodes well for the sector,” he added. Marchionne — who, like Bains, earned an MBA degree at the University of Windsor — “spoke very positively about Canada,” the minister said.
“That’s always been an advantage for Canada … qualified, skilled people have always been welcome here, but not always so in the United States, and especially under Trump,” said Faria.
Windsor West MP Brian Masse, the NDP critic in the innovation, science and technology portfolio, agreed the current political climate in the U.S. provides Canada with a competitive edge and presents “a great opportunity to seize upon our diversity.”
But Masse, who accompanied Bains to this week’s G7 conference, described as “ghastly frightening” the fact Canada has been unable in recent years to lure a new automotive assembly plant. As for the billions in new automotive assembly plant investments touted by Bains, Masse said much of that was the result of Unifor’s contract demands at the bargaining tables.
At a time of record vehicle sales in Canada, “it’s been a pretty lopsided score,” said Masse, comparing domestic auto investment to that in the other two NAFTA countries.
While “still a good place for the parts industry,” Faria said Canada is “not top-of-mind” for any auto company looking for a place to build a new assembly plant. The country remains strong in the multibillion-dollar auto parts sector, but he said the trend that saw nine of the last 10 North American automobile assembly plants going to Mexico — and the 10th to the U.S. — is unlikely to change.
“There’s not much clarity about what’s going on,” Matt Marchand, president and CEO of the Windsor-Essex Regional Chamber of Commerce, said of the NAFTA talks that resume in Washington in two weeks.
Even after several rounds of talks, Canada’s negotiators were still waiting this week for their American counterparts to present more detailed positions about what it is they’re after, for example on the rules-of-origin requirements for automobiles.
“We don’t know if that’s a tactic (of the Americans) or a strategy,” said Marchand.
When it comes to the parts sector, Volpe said Windsor and Essex County’s interests are “acutely tied to the fortunes of Detroit and Michigan,” and that’s still the centre of the North American automobile industry.
“There’s always a risk (in international trade talks) … but the last thing you want to do is hurt your own,” he said of the Trump team’s likely auto strategy in the current negotiations.
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