Federal leaders urged to 'do everything they can' to save auto sector

Leaders of Canada's major federal parties must "do everything they can" to create an effective national auto policy to maintain what remains of a dwindling industry, says an expert in the field.

Canada's auto industry lost 53,000 jobs between 2001 and 2013, report finds

Three assembly plants in Ontario have questionable futures, according to an auto industry expert, who urges the next government to do everything it can to create an effective national auto policy. (Canadian Press File Photo)

Leaders of Canada's major federal parties must "do everything they can" to create a national auto policy to maintain what remains of a dwindling industry, says one expert.

University of Windsor auto analyst Tony Faria said during an interview with CBC that a trio of assembly plants in Ontario have uncertain futures:

  • Ford's Windsor engine plant has no guaranteed product after 2018.
  • GM's Oshawa assembly line has no product guarantee after 2017.
  • Chrysler's Bramalea Assembly Plant in Brampton needs upgrades.

Whoever forms the next government must "do everything they can to hold on to what we have, because we're on the verge of losing more of our auto industry," Faria said.

Canada's auto industry lost 53,000 jobs from 2001-2013, according to the Automotive Policy Research Centre in Hamilton.

Ontario shed 43,000, while Windsor alone lost 11,900.

"Canada lacks an automotive strategy and automotive policy. It does not have clear, consistent automotive programs," Faria said in the recent interview.

While political parties agree something must be done, none is willing to spend heavily or offer freebies, like Mexico and America.

Faria said Canada needs a single federal point person or department similar to Mexico's ProMéxico department.

"An auto assembler doesn't have to run around and talk to federal people, provincial people and municipal government officials. You go to one source and everything that's available to the auto assembler is laid out," Faria said.

NDP won't put billions on table

On Wednesday, NDP Leader Tom Mulcair announced his party would do that, by creating ICanada if his party forms the government.

"When you streamline your approach, when you make sure companies know there's a single door to knock on, a single place to arrive and get all the information and help navigate the various agencies and programs you start getting results," Mulcair told CBC Windsor.

The NDP also pledged to:

  • Improve financial incentives, including making contributions provided under the Automotive Innovation Fund tax-free and doubling funds available through the Automotive Supplier Innovation Program.
  • Support auto research and innovation, including renewing funding for Windsor-based national automotive research network AUTO21, which is winding down after its federal funding ended.

"We're not talking about putting billions of dollars on the table to entice [automakers] to come into Canada," Mulcair said. "We're going to make life easier for outside investors. We're going to streamline things."

Mulcair also said he would convene a meeting of provinces and other stakeholders within the first 100 days of an NDP government to co-ordinate an auto strategy.

Tories blame pension plans, energy rates

The Conservatives prefer to stimulate the industry through repayable loans, low taxes and trade agreements, like the one with the European Union.

However, Canadian auto-parts makers are currently begging the government not to give in to demands from Japan for less NAFTA-made content in vehicles at talks on the Trans-Pacific Partnership.

The TPP talks broke down in July when Mexico and Canada balked at content rules that could have meant Japanese vehicles could be imported with fewer parts made in North America.

Incumbent Essex Conservative MP Jeff Watson, who claims to be the first autoworker elected to Parliament, said Conservatives "are doing all the types of things to keep the cost of doing business low, for operating, and to make  strategic investments."

The Conservatives introduced the $250-million Automotive Innovation Fund in 2009 and renewed it for the same amount this year.

A similar fund for auto-parts makers was unveiled this year.

Watson claimed the programs created 1,400 new jobs at Ford's Oakville plant, "several jobs" at Toyota's Cambridge plant and "thousands of jobs" at Guelph-based parts supplier Linamar.

Last week, the Tories promised Burlington, Ont., would be home to a new, non-profit manufacturing hub beginning in 2016-2017 at a cost of $30 million annually for five years.

Conservatives would also create a new trade promotion office within the prime minister's own bureaucracy to attract business.

No new Canadian investment

Although some automakers retooled existing plants in Canada last year, none announced new capacity investments in Canada, according to a University of Windsor report.

The report also said Canada has not received new capacity investments in four of the last five years. From 2011 to 2014, Canada has received $180 million, or 0.2 per cent, of all global new capacity investment.

Nearly 60 per cent of that — a total of $48.7 billion — has been in China.

The next three leading countries were:

  • Mexico: $9.3 billion.
  • U.S.: $7.7 billion.
  • Brazil: $7.6 billion.

In many of those countries, automakers have access to a wide range of tax, land and infrastructure incentives, not to mention cheaper labour costs.

"We can't match $5-an-hour labour rates. Our labour costs are at the high end at $34 an hour, but they're not unreasonable," Faria said.

Faria also said Canada usually offers repayable loans and little money tax free.

"That is not the case in Mexico in any way, shape or form. And in the U.S. it's not usual for state governments to come up with 60 or 70 per cent of the cost of building a facility. None of that is repayable. We have got to get more active in the same fashion to attract assembly investment."

Watson disagrees. He blamed others costs, like the planned Ontario Pension Plan, Canada Pension Plan hikes pitched by the NDP and "skyrocketing electricity rates in Ontario."

"All these additional costs have nothing to do with manufacturing a vehicle but make it very expensive here," Watson said.

'We do have competitive tax'

That's why Conservatives focus on tax breaks, he said.

"We do have competitive business taxes, and that's a positive," Faria said.

The Liberals have yet to release a detailed automotive strategy but Windsor-Tecumseh candidate Frank Schiller, whose riding borders Fiat-Chrysler's Windsor Assembly Plant, said a Liberal manufacturing strategy would have "an automotive component."

He said the Liberals also want a more consolidated auto or manufacturing department.

Schiller said current policy and procedures bring automakers to Canada and introduce them the "complexities of tax codes and inter-provincial and federal jurisdictional bickering," instead.

"It's about more than a single-stop shop," he said. "We promote oil and gas, we promote pulp and paper and softwood lumber but we have to bring that same approach to promoting auto and manufacturing."

With files from Canadian Press, CBC


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