Factory’s death pops illusion USMCA deal was win for Canada
Pact’s mere accomplishment was ending the distraction, Kevin Carmichael writes.
Most of us Canadians are relatively pleased with the new NAFTA. At least we were a month ago, when some 54 per cent of respondents to an online poll by Pollara Strategic Insights for Maclean’s magazine said they liked the outcome of the Trudeau government’s 13-month tangle with the Trump administration over the overhaul of the North American Free Trade Agreement.
You have to wonder if the result would be so positive today.
Pollara closed its online poll on Oct. 24, 2018; a more innocent time when it looked like Chrystia Freeland, the global affairs minister, with the very visible support of Jerry Dias, president of Unifor, and Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, had bought Canada time to prepare for automobile Armageddon — that moment that everyone can see coming, when high-cost assemblers of cars and trucks are left behind by a world that wants significantly less of what they make.
“The whole uncertainty around some of the key economic factors that impact Canadians has really been resolved,” Dias told reporters on Oct. 1, the day after the leaders of Canada, Mexico and the U.S. agreed on a revised set of rules for North American trade.
Life comes at you fast. The certainty of which Dias spoke lasted less than two months. Mary Barra, chief executive of General Motors Co., broke with her industry’s tradition of ignoring the horizon and driving full speed into bad weather. While politicians and lobbyists dickered over rules of origin, the leader of North America’s biggest automaker apparently decided that the near-term future of her company was in supplying pickup trucks and sport-utility vehicles, and that longer term success would depend on GM’s skill at building automobiles powered by electricity and that drive themselves.
Barra announced on Nov. 26 that eight of the company’s facilities — and about 6,700 of its factory workers — were superfluous to that vision. One was in her backyard of Detroit. Another was in Oshawa, Ont., the symbolic centre of Canada’s automotive industry since the time of the First World War. Almost 3,000 Canadians will be terminated next year, along with the models they build, the Chevrolet Impala and the Cadillac XTS, sedans that GM had decided to stop making because there is little demand for them.
“Right now the auto industry is being massively disrupted and we’re trying to get ahead of that,” said David Paterson, vice-president of corporate affairs at GM’s Canadian unit. “If the company doesn’t take bold steps to move to the new technology, then there won’t be any jobs.”
In the immediate aftermath of the announcement, there were attempts made at blaming Donald Trump for bringing about the end of car making in the Greater Toronto Area. Some accused the fat cats in Motor City of putting corporate greed ahead of the communities that are the foundation of their sprawling, if shrunken, auto empire. David Olive, a columnist at the Toronto Star, even argued that General Motors of Canada Co. should be nationalized.
At times like these, we are terrible at directing the blame where it belongs: at ourselves.
For more than a year, we treated the NAFTA negotiations as a superficial David-versus-Goliath story. Rarely did we ask why negotiations to update 24-yearold trade rules for the “21st century” were being dictated by dairy farmers and auto companies and their union. When David avoided being stomped, we rejoiced and called it a victory, even if the dairymen and women came out of it bloodier than some in Quebec and parts of Ontario have been able to stomach.
GM’s factory closures should end the delusion that anything important was achieved during the NAFTA talks. The accomplishment was ending the distraction. Otherwise, in order to save the Impala, we swallowed new U.S. patent standards and put down arms without any resolution to metal and lumber tariffs. And then we lost the Impala anyway.
Canada ceded the game a century ago when GM bought McLaughlin Motor Car Co., the former Commonwealth carriage powerhouse that got into automobiles in the early years of the 20th century. Instead of fighting market forces, we chose to go with the flow and effectively rent an automobile industry from owners in the U.S., and later Japan. Trade agreements like the Auto Pact and the Canada-U.S. Free Trade Agreement made Canada an attractive place to offshore production for the North American market, but those jobs always existed by the grace of the international owners of the intellectual property.
“Detroit has failed us,” an Oshawa autoworker told As It Happens, the CBC Radio interview show.
Generations of politicians and union leaders have failed him, too. There were more than 500,000 unfilled jobs in the second quarter, according to Statistics Canada. A progressive union and serious governments would be working on ways to match needy employers with imperilled autoworkers. Nothing like that was mentioned after Dias met Trudeau in Ottawa on Nov. 27. Instead, the union leader demanded tariffs on imports of GM automobiles from Mexico. “The prime minister doesn’t view it as a fait accompli,” Dias said at a press conference. “He’s going to roll up his sleeves and fight with us.”
Nothing wrong with trying to persuade Barra that she has misjudged the potential of the Oshawa factory.
But Trudeau’s fight should be with provincial governments and companies to figure out why the labour shortage has become chronic. And he should shift his trade strategy to make sure Canada retains ownership of a greater share of the ideas economy. If he doesn’t, some future digital worker will be lamenting about how Silicon Valley failed us.