Tar­iffs loom large in auto towns

The Daily Observer - - ONTARIO NEWS - ARMINA LIGAYA

WIND­SOR, Ont. — Mike Malott has sur­vived mas­sive tur­moil dur­ing his nearly 20 years as an au­to­mo­tive worker here in the heart of the Canadian in­dus­try — but now that his liveli­hood is in the crosshairs of a United States pres­i­dent who ap­pears hell-bent on re­strict­ing cross-bor­der trade, he is fright­ened.

The 43-year-old assem­bly line worker and other res­i­dents of this South­west­ern Ontario city have been on edge for months dur­ing strained North Amer­i­can Free Trade Agree­ment ne­go­ti­a­tions that have in­cluded in­tense scru­tiny of auto pro­duc­tion in Canada, the U.S. and Mex­ico.

But Trump’s post-G7 Twit­ter tirade about im­pos­ing a 25 per cent tar­iff on auto im­ports from Canada could have po­ten­tially dev­as­tat­ing con­se­quences for the in­te­grated sup­ply chain that has been built over decades and cause job losses on both sides of the bor­der.

Some fear the penal­ties could drive the city ’s auto plants, in­clud­ing the Fiat Chrysler Au­to­mo­tive fac­tory where Malott has spent the ma­jor­ity of his ca­reer, out of Wind­sor and the coun­try al­to­gether.

“I can’t even imag­ine what the city would look like with­out Chrysler in it,” Malott said in an in­ter­view on Tues­day at the sub­ur­ban Wind­sor home he shares with his wife, three chil­dren and a choco­late lab.

“This city would be­come a ghost town.”

Malott is one of the roughly 6,000 peo­ple em­ployed at the assem­bly plant, the largest man­u­fac­tur­ing work­place in Canada, ac­cord­ing to a 2017 re­port from the Au­to­mo­tive Pol­icy Re­search Cen­tre at McMaster Univer­sity in Hamil­ton.

He wor­ries he’d have dif­fi­culty find­ing an equiv­a­lent job in the city with his skill set if he were to lose his job at the assem­bly plant, which typ­i­cally pays up­wards of $30 an hour.

“If I don’t have a Chrysler job, I don’t have what I have to­day.”

Wind­sor would be the epi­cen­tre of a tar­iff fallout that could im­pact Ontario’s en­tire eco­nom­i­cally im­por­tant man­u­fac­tur­ing base and re­ver­ber­ate across the coun­try. Canada’s auto sec­tor, the coun­try’s lead­ing ex­porter, de­liv­ers roughly $80 bil­lion in eco­nomic ac­tiv­ity an­nu­ally. It em­ploys some 500,000 Cana­di­ans through di­rect and in­di­rect jobs.

The city has long been syn­ony­mous with the auto in­dus­try — dur­ing the early 20th cen­tury, Ford, Gen­eral Mo­tors and Chrysler all had op­er­a­tions here.

But the in­dus­try was dec­i­mated in the wake of 2008’s Great Re­ces­sion, which saw both the Ontario and Fed­eral gov­ern­ment in 2009 step in to con­trib­ute $10.6 bil­lion to Chrysler Canada and GM Canada to keep them afloat.

GM closed its re­main­ing man­u­fac­tur­ing plant in Wind­sor in 2010, end­ing its 90-year-re­la­tion­ship in the city. Ford still has two engine plants in Wind­sor, em­ploy­ing roughly 2,330 peo­ple be­tween them — far from the as many as six plants the au­tomaker had at one point.

But the city still wears its au­to­mo­tive cre­den­tials with pride. Posted out­side of the FCA Wind­sor assem­bly plant is a sign that reads: “Made. Right. Here. Chrysler Paci­fica. Wind­sor Proud.”

The sec­tor’s health, how­ever, re­mains heav­ily re­liant on the United States.

Canada ex­ported some $63 bil­lion worth of au­to­mo­biles in 2016, 96 per cent of which was to the U.S., ac­cord­ing to Sta­tis­tics Canada and the U.S. Cen­sus Bureau. On top of that, the coun­try ex­ported roughly $21 bil­lion in auto parts in 2016 — 90 per cent of which was shipped south of the bor­der, ac­cord­ing to the APRC.

Ev­ery Canadian auto assem­bly job cre­ates nine spinoff jobs — rang­ing from parts sup­pli­ers to res­tau­rants — ac­cord­ing to the Canadian Ve­hi­cle Man­u­fac­tur­ers’ As­so­ci­a­tion.

The au­to­mo­tive in­dus­try and the an­cil­lary busi­nesses are still the “bread and but­ter” of Wind­sor, but the city has been mak­ing ef­forts to di­ver­sify into other in­dus­tries and skills in ar­eas such as In­for­ma­tion Tech­nol­ogy, said Mayor Drew Dilkens.

“Noth­ing changes quickly, but we’re com­mit­ted to di­ver­si­fi­ca­tion,” he said.

Auto parts mak­ers have also tried to di­ver­sify into other in­dus­tries and mar­kets, said Jonathon Az­zopardi, chief ex­ec­u­tive of Wind­sor-area tool and mould com­pany Laval In­ter­na­tional and a board mem­ber of the Au­to­mo­tive Parts Man­u­fac­tur­ers’ As­so­ci­a­tion.

Yet, roughly 70 per cent of the as­so­ci­a­tion’s mem­bers send their wares due south and many prod­ucts cross the bor­der roughly seven times in the process, he said.

The re­cent U.S. im­po­si­tion of steel and alu­minum tar­iffs will al­ready con­strain their prof­itabil­ity, which would be ex­ac­er­bated by an auto tar­iff.

“Those who still rely heav­ily on the U.S. and the auto in­dus­try should be pretty con­cerned,” Az­zopardi said.

“It could deal a death blow to the au­to­mo­tive in­dus­try for Canada.”

The tar­iff threat looms at a time when the au­to­mo­tive in­dus­try has just re­cov­ered from the 2008 re­ces­sion. The sec­tor em­ployed an es­ti­mated 140,404 peo­ple in 2016, af­ter adding roughly 14,700 jobs over the pre­ced­ing four years, ac­cord­ing to a re­cent re­port from McMaster’s auto cen­tre.

Trump’s com­ments have also cast un­cer­tainty on plan­ning in an in­dus­try that makes de­ci­sions on new ve­hi­cles five years in ad­vance, said Ken Lewenza, the for­mer na­tional pres­i­dent of the Canadian Auto Work­ers union, who now works as an ad­viser for the union’s lat­est it­er­a­tion, Uni­for, in Wind­sor.

Many cor­po­rate board rooms in the auto in­dus­try are likely hit­ting the brakes on their plans as a re­sult, he said, as the deeply in­te­grated North Amer­i­can au­to­mo­tive sup­ply chain op­er­ates “al­most with­out borders.”

Detroit, or Mo­tor City, sits just across the river from Wind­sor — and the GM and Chevro­let lo­gos em­bla­zoned on the tallest tower of the Amer­i­can city’s sky­line serves as a peren­nial re­minder of their mu­tual ties to the au­to­mo­tive in­dus­try.

“You can’t shut down the Canadian op­er­a­tions with­out af­fect­ing U.S. op­er­a­tions. And vice versa,” Lewenza said.

“This, quite frankly, would be a real chal­lenge for the auto in­dus­try and be a longer type problem.”

Ontario’s auto sec­tor em­ploys an es­ti­mated 124,000 peo­ple. A blow to the thou­sands of jobs at fac­to­ries in auto towns across the prov­ince, in­clud­ing in Al­lis­ton, Bramp­ton, and Oshawa, would also have a rip­ple ef­fect on the res­tau­rants, cafes, stores and other busi­nesses that rely on au­towork­ers’ pa­tron­age.

Auto man­u­fac­tur­ing is still a cru­cial part of lo­cal economies even in cities such as af­flu­ent Oakville, of­ten re­garded as a bed­room com­mu­nity for com­muters to Canada’s fi­nan­cial heart in Toronto.

GE­OFF ROBINS/THE CANADIAN PRESS

Work­ers ar­rive for their shift at the Chrysler assem­bly Plant in Wind­sor, Ont., on Tues­day. U.S. Pres­i­dent Don­ald Trump’s threat of a 25 per cent tar­iff on auto im­ports from Canada is mak­ing a lot of Ontario towns ner­vous.

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