How the on­go­ing Cami strike ex­plains NAFTA

Sentinel-Review (Woodstock) - - FRONT PAGE - NOR­MAN DE BONO

It’s a mi­cro­cosm of a larger fight. As the strike by 2,800 work­ers at Inger­soll’s Cami assem­bly plant be­gins its fourth week, the stand­off un­der­lines what’s hap­pened to Canada’s auto in­dus­try un­der the North Amer­i­can Free Trade Agree­ment (NAFTA) and why the stakes are so high, es­pe­cially with a tough-talk­ing Don­ald Trump in the White House.

Big auto assem­bly plants pay­ing top wages, like Cami, have closed with that work mov­ing south, from both Canada and the U.S., to lowwage Mex­ico.

The not-so-ob­vi­ous parts of the in­dus­try here, how­ever – the many parts plants that sup­ply au­tomak­ers, like those up and down High­way 401 in south­west­ern On­tario – have boomed.

NAFTA has driven mas­sive change in Canada’s auto in­dus­try, both good and bad, econ­o­mists and in­dus­try watch­ers ar­gue.

The con­ti­nent-wide trade deal, en­acted in 1994, has been slammed by Uni­for as lead­ing to the ruin of the Cana­dian auto in­dus­try and has been di­rectly blamed for the on­go­ing strike by work­ers at Cami Assem­bly in Inger­soll.

But the trade agree­ment has helped the in­dus­try as well as hurt it, in­te­grat­ing our econ­omy di­rectly with the for­tunes of the United States, some say.

“The num­bers speak for them­selves,” said Den­nis Darby, chief ex­ec­u­tive of Cana­dian Man­u­fac­tur­ers and Ex­porters.

Seventy-five per cent of our trade is with NAFTA part­ners, “and it has been pos­i­tive,” he said. “In 1993, we ex­ported less than $40 bil­lion to the U.S. in ve­hi­cles and parts and now it is $75 bil­lion to­day.”

Per­haps more im­por­tantly, it has forced in­dus­try here to spe­cial­ize, be­come ex­pert, so to speak. In the lan­guage of busi­ness, we have be­come “ad­vanced man­u­fac­tur­ers.”

That means low tech is out, high tech is in.

We can now boast of soft­ware development and tech­nol­ogy in ma­chin­ing and parts-mak­ing that make us spe­cial­ized. It also means a lot of in­dus­try has fallen, not able to com­pete with low-pay­ing jobs, specif­i­cally in Mex­ico.

“There has been a push to in­vest­ment, to au­to­ma­tion,” said Kris­telle Audet, se­nior econ­o­mist with the Conference Board of Canada.

“But there has been a lot of in­vest­ment in Mex­ico. It is a fact that to­day ev­ery sin­gle car man­u­fac­turer in the world has in­vest­ment in Mex­ico. There has been a shift in auto assem­bly in Mex­ico, and NAFTA em­pow­ered that.”

It’s not hard to see why. Wages at assem­bly plants there range from $3 to $8 an hour, com­pared to $34 an hour here for work­ers at large auto assem­bly plants, like Cami. Its 2,800 work­ers are on strike, largely over job se­cu­rity lan­guage de­mand­ing it will not lose work, as­sem­bling the Chevro­let Equinox cross­over ve­hi­cle, to Mex­ico.

Union lead­ers have called the strike a fight over NAFTA. Af­ter the plant lost pro­duc­tion of the GMC Ter­rain in July to Mex­ico – along with the jobs of more than 400 work­ers – it be­came the “poster child” for what is wrong with the trade deal, they ar­gue.

“In big-picture terms, what we have done is trade jobs in On­tario for au­tomak­ers’ prof­its,” said

Jeff Ru­bin, econ­o­mist and se­nior fel­low with the Cen­tre for In­ter­na­tional Gov­er­nance and In­no­va­tion, who has writ­ten on the trade deal.

“There has been a huge shift in em­ploy­ment to Mex­ico. In the last 10 years, we have seen mas­sive in­vest­ment in in­dus­try in Mex­ico.”

The auto sec­tor in Canada has lost about 45,000 jobs over 15 years, ac­cord­ing to Sta­tis­tics Canada. Its to­tal has fallen from more than 170,000 in 2001 to 126,875 in 2016.

“From 2010 to 2015, the in­vest­ment in ve­hi­cles in Mex­ico is five times the in­vest­ment here,” said Ru­bin, a for­mer chief econ­o­mist with CIBC.

“That is not a sur­prise. Why wouldn’t they, given the dif­fer­ence in labour costs?”

In Canada un­der NAFTA, au­tomak­ers have closed four assem­bly plants, while 10 have been shut­tered in the U.S. In Mex­ico, eight have opened and there are now plans to open two more, ac­cord­ing to fig­ures from Ward’s Au­to­mo­tive.

But the Conference Board puts for­ward dif­fer­ent fig­ures when it comes to jobs and a more pos­i­tive picture of man­u­fac­tur­ing pro­duc­tion, say­ing the auto sec­tor em­ployed 116,000 in 1994 and that dropped to 106,800 in 2016.

It also pro­posed the GDP in the auto sec­tor – the value of goods made – has risen to $16 bil­lion last year from $14 bil­lion in 1997.

What has emerged is that while the num­ber of ma­jor assem­bly plants has dwin­dled, parts sup­pli­ers

and ma­chin­ing in­dus­tries have seen growth. In­dus­try that is small, spe­cial­ized and high-tech has been able to com­pete.

It is also dif­fi­cult to link any de­cline in Cana­dian man­u­fac­tur­ing for­tunes di­rectly to Mex­ico. Con­sider that man­u­fac­tur­ing ex­ports from Canada were re­stricted af­ter the 9/11 at­tacks in 2001, took an­other hit in 2008-09 dur­ing the re­ces­sion and were hurt in the mid-2000s by the surge in Cana­dian cur­rency.

So, the line be­comes blurred as to how much blame Mex­ico and NAFTA must get, for a de­cline in auto man­u­fac­tur­ing here.

“NAFTA has been sin­gled out, but

it is im­por­tant to keep in mind there are nu­mer­ous fac­tors,” said Audet, the Conference Board econ­o­mist. “In the auto sec­tor, the past 10 years have seen a clear de­cline, but NAFTA is not the only rea­son.”

NAFTA also re­quires that any ve­hi­cle as­sem­bled has 62.5 per cent of its parts from other North Amer­i­can sup­pli­ers. It does not dic­tate where the sup­plier must come from, but On­tario has won some of that work, said Audet.

“That al­lowed us to spe­cial­ize, be more ef­fi­cient, and that is what we do best. In the long run, that has been the shift,” she said.

Darby, of Cana­dian Man­u­fac­tur­ers and Ex­porters, adds

that em­ploy­ment in man­u­fac­tur­ing has been sta­ble, 1.7 mil­lion across Canada, in re­cent years.

“It is al­ways dan­ger­ous to look at one sec­tor,” Darby said of auto in­dus­try watch­ers not get­ting the full picture.

“It is true we don’t make as many toast­ers here as we used to. Man­u­fac­tur­ing has changed, jobs have changed and many are now high tech. The work­force has done a great job ad­just­ing to the new re­al­ity.”

If NAFTA talks fail and U.S. Pres­i­dent Don­ald Trump slaps a 30 per cent tar­iff on Mex­i­can im­ports as he has threat­ened – and did to Canada on soft­wood and Bom­bardier – “that would end the Cami strike in a sec­ond,” said Ru­bin. GM would have lit­tle prob­lem en­sur­ing pro­duc­tion in Inger­soll, if it costs more to im­port from Mex­ico, he rea­sons.

“If Trump thinks Amer­ica work­ers have not done well, he should check out Canada,” he said.

Uni­for would like to see wages, ben­e­fits and work­place health and safety stan­dards, as well as en­vi­ron­men­tal stan­dards for man­u­fac­tur­ers, made part of Canada’s de­mand­sun­derNAFTA­forMex­i­can in­dus­try, said Bill Murnighan, Uni­for’s di­rec­tor of re­search.

“We want there to be real unions to bar­gain col­lec­tively and raise wages. They talk about more trade, but there is noth­ing au­to­matic about more trade de­liv­er­ing ben­e­fits. We have lost thou­sands of parts jobs, too,” he said.

“It is a trou­bling sign, not a pos­i­tive sign. We are ship­ping val­ueadded jobs to Mex­ico.”

In­dus­try also wants changes to NAFTA, adds Darby. There was no in­ter­net in 1994 and now goods be­ing shipped could use on­line pre­clear­ance tech­nol­ogy.

They also would like greater labour mo­bil­ity across bor­ders and lan­guage ad­dress­ing tech­nol­ogy and soft­ware development, as part of ex­ports, he said.

“NAFTA needs to be mod­ern­ized,” said Darby.

BRUCE CHESSELL/SEN­TINEL-RE­VIEW

A rally was held Fri­day in front of the Cami au­to­mo­tive plant, boost­ing the morale of work­ers who have been on strike since mid-Septem­ber.

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