Home WorldAmericas Are Canada’s auto industry jobs dependent on government support?

Are Canada’s auto industry jobs dependent on government support?

by YAR

This week, Prime Minister Justin Trudeau was in my hometown of Windsor, Ontario, to announce that his government was giving more money to Stellantis, the automaker that owns the former Chrysler minivan plant in Windsor. Along with Doug Ford, Ontario’s premier, Trudeau said the two levels of government would give the company about 1 billion Canadian dollars to help refurbish that factory, as well as one in Brampton, Ontario, as they move on. to manufacture electric vehicles.

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

But that was not all. About a month ago, General Motors received $518 million for two Ontario factories, one of which is being converted to make all-electric delivery trucks. And in March, the two governments provided $263 million for Honda’s two assembly lines in Ontario.

“With the deals we’ve made with automakers in recent months, we’re supporting autoworkers across the country,” Trudeau said. he said on Twitter on Thursday. “We are securing more than 16,000 good middle-class jobs.”

It’s not uncommon for governments around the world to heavily subsidize auto manufacturing jobs, as Ontario and the federal government have done, given that auto factories can fuel the economy, generate tax revenue, and generally save money. pay employees well.

This week I spoke with Greig Mordue, chair for advanced manufacturing policy and associate professor of engineering at McMaster University, who offered some warnings about the help that the government, both federal and provincial, has given to industry and the implications of the latest advertisements.

He has experienced the grant process as a consultant to governments and as CEO of Toyota Motor Manufacturing Canada, which operates two factories in southern Ontario.

“All the actors spend a lot of time talking about the car renaissance in Canada and I understand why they do it,” he told me. “But no matter how you look at it, the industry has regressed over the last 20 years and all these recent announcements, while welcome, are not contributing to anything.”

For an upcoming contribution to an academic book on the North American auto industry, Mr. Mordue estimated that Ontario and the federal government have given automakers C$9.1 billion since 2000. The resulting level of employment and output he calculated is not encouraging, he said. In 2000, Ontario’s automobile factories employed 54,000 people, making three million vehicles. In 2020, despite investments from governments, the factories employed only 37,000 people and made around 1.1 million vehicles.

The future of Canada’s auto industry grew dark, Mordue told me, some 22 years ago, when auto companies realized they could produce their most expensive luxury models in Mexico to the same quality levels as factories anywhere. anywhere else in the world, including Canada. Since then, he said, “Canada has been looking for its source of competitive advantage.”

Mexico, by contrast, has an overwhelming advantage when it comes to labor costs. The money given to Honda, he estimates, will cover six months’ wages and benefits for the 4,000 workers in Alliston, Ontario. By contrast, a plant in Mexico would take six to ten years to generate a similar labor bill.

He said Canada’s approach to how it subsidizes auto jobs differs greatly from the approach of US states. In the United States, he said, state governments typically offer only a one-time incentive to build plants. Canada, by contrast, generally subsidizes the refurbishment of factories as new products come out every five or six years.

“America’s approach is: one and done,” Mordue said. “But we are: one and then every five years. I’m not convinced Canada needs to do that.”

Nor is it necessarily a given that Canadian plants would close without regular injections of government money. It’s much easier and less expensive to repurpose an existing factory than it is to open a new one, a process that involves hiring and training large numbers of workers and establishing a supplier base near the factory, Mordue said.

Mr. Mordue said it was also impossible to determine whether the car companies’ investments in Canada would have gone ahead without government money or even whether the investment decisions had already been made before the carmakers asked for help from the governments. governments.

“You don’t know what the truth is, no one is ever going to tell you,” he said, adding that neither the Ontario government nor the federal government had been willing to bet that the automakers’ investments would come without subsidies.

“That is the bet that the government has to make,” he said. “And so far, they haven’t taken any chances in Canada.”


This week’s Trans Canada section was compiled by Vjosa Isai, Canada 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 created by indigenous groups in Canada are among the 1,000 items on display. The exhibit was co-curated by an indigenous leader from Vancouver Island, though he is among critics who argue that storing the works of colonized societies in museums is an outdated practice.

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

  • The Stanley Cup playoffs began on May 4. This is what you need to know. The Pittsburgh Penguins are back in the playoffs, riding a record winning streak, and that’s largely due to Sidney Crosby.

  • Chris Snow, assistant general manager of the NHL’s Calgary Flames, learned 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 his luck, both good and bad.

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

  • Four cadets graduating from the Royal Military College in Kingston, Ontario, died after their car plunged into the St. Lawrence River.


A native of 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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