‘A death blow’
Tariff threat looms large in the heart of Canada’s auto industry
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 the Windsor and Essex area, 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.”