Do all jobs in the auto industry depend on government support?


This week, Prime Minister Justin Trudeau was in Windsor, Ontario, my hometown, to announce that his government was giving more money to Stellantis, the automaker that owns the former Chrysler minibus plant in Windsor. Joined by Ontario’s premier Doug Ford, Mr. Trudeau said the two levels of government would give the company approximately $1 billion Canadian dollars to help remodel that factory and the one in Brampton, Ontario as they transition to making electric vehicles.

It was just one of several recent announcements from the federal government and Ontario that disclosed financing for auto companies. In late March, South Korean electronics giant Stellantis and LG received $5 billion to build an electric vehicle battery factory in Windsor, in what the government called “the largest investment in Canada’s auto industry.”

But that wasn’t all. About a month ago, General Motors received $518 million for two Ontario plants, one of which is being converted into all-electric vans. And in March, the two governments gave $263 million for Honda’s two Ontario assembly lines.

“With the deals we’ve made with automakers in recent months, we’re supporting auto workers across the country,” Trudeau said. said Thursday on Twitter† “We provide more than 16,000 good jobs in the middle class.”

It is not uncommon for governments around the world to heavily subsidize auto jobs, as Ontario and the federal government have done, as auto plants can stimulate the economy, generate tax revenues and generally pay workers well.

This week I spoke with Greig Mordue, the chair of advanced manufacturing policy and an associate professor of engineering at McMaster University, who commented on some of the support the government, both federal and state, has provided to industry and the implications of the latter. announcements.

He has experienced the grant process as an advisor to governments and as general manager of Toyota Motor Manufacturing Canada, which operates two plants in southern Ontario.

“All the actors spend a lot of time talking about the renaissance of the automotive industry in Canada and I understand why they’re doing it,” he told me. “But however you slice it, the industry has been in decline for the past 20 years and all these recent announcements, while they’re welcome, they don’t add anything.”

For an upcoming contribution to an academic book on the North American automotive industry, Mr. Mordue calculates that Ontario and the federal government have given automakers 9.1 billion Canadian dollars since 2000. The resulting level of employment and production he calculated is not encouraging, he said. In 2000, Ontario auto plants employed 54,000 people who made three million vehicles. In 2020, despite government investment, the factories employed only 37,000 people, accounting for about 1.1 million vehicles.

The future of the Canadian auto industry was darkened, Mr. Mordue told me about 22 years ago, when auto companies realized they could produce their most expensive luxury models in Mexico with the same level of quality as factories anywhere in the world, including Canada. Since then, he said, “Canada has grasped at its source of competitive advantage.”

Mexico, on the other hand, has an overwhelming advantage when it comes to labor costs. The money given to Honda, he estimates, will cover six months in wages and benefits for the 4,000 workers in Alliston, Ontario. In contrast, it would take six to 10 years for a factory in Mexico to have a comparable labor cost.

He said Canada’s approach to how it subsidizes highways is very different from that of US states. In the United States, he said, state governments usually offer only a one-time incentive to build factories. Canada, on the other hand, generally subsidizes factory remodeling as new products come out every five or six years.

“The American approach is one and done,” said Mr. mordu. “But we are: once and then every five years. I’m not convinced Canada should do that.”

Nor is it necessarily a given that Canadian factories would close without the regular infusions of government money. It is much easier and cheaper to reuse an existing factory than to open a new one, a process that involves hiring and training large numbers of workers and establishing a base of suppliers near the factory, Mr. mordu.

Mr Mordue said it was also impossible to determine whether investment by auto companies in Canada would have continued without government funding or even whether investment decisions had been made before automakers sought help from governments.

“You don’t know the truth, no one will ever tell you,” he said, adding that neither the Ontario government nor the federal government was willing to gamble that automakers’ investments would come without subsidies.

“That’s the gamble the government has to play,” he said. “And so far they haven’t taken any chances in Canada.”

This week’s Trans Canada section was curated by Vjosa Isai, a Canadian news assistant at The New York Times.

  • The American Museum of Natural History in New York will reopen its oldest gallery on May 13 after a five-year renovation. Artifacts made by Indigenous groups in Canada are among the 1,000 items on display. The exhibition was co-curated by a Vancouver Island Indigenous leader, though he is one of the critics who argue that storing the works of colonized societies in museums is an outdated practice.

  • Hydro Quebec is vying to make progress with plans to send renewable electricity converted from water from the La Grande River across the border through Maine and on to Massachusetts. But the $1 billion project that would help the state meet its climate goals has been stalled, in part because of a legal battle waged by an unlikely coalition, Times climate correspondent David Gelles writes.

  • The Stanley Cup playoffs began on May 4. Here’s what you need to know. The Pittsburgh Penguins are back in the playoffs with a record run, thanks in large part to Sidney Crosby.

  • Chris Snow, an assistant general manager for the NHL’s Calgary Flames, was told he had amyotrophic lateral sclerosis, or ALS, in 2019, and was expected to live no more than a year. Three years later, he and his family are enjoying their happiness, both good and bad.

  • Arcade Fire, the Montreal-based band, have released a sixth album, a reset after the mediocre release of their previous LP.

  • Four cadets who were due to graduate from the Royal Military College in Kingston, Ontario, died after their car crashed into the St. Lawrence River.

Born in Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported on Canada for The New York Times for the past 16 years. Follow him on Twitter at @ianrausten.

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