Consider the auto industry this election
It’s no news that Canada’s energy exports are running out of steam.
But, after nearly eight years of dominance, non-domestic oil and gas sales were finally trumped by cars in July.
Statistics Canada data showed that the automotive sector shipped out $7.6-billion-worth of products that month: the industry’s highest since 2006.
Automotive didn’t fare as well in August but most are projecting much stronger months ahead. That would signal a major change in Canada’s economic dynamic: we would be far more dependent on our manufacturing muscle than the recent past.
The auto industry’s return to form is worth rejoicing, but let’s be realistic here.
This revenue growth is more a reflection of surging North American automotive demand than Canada’s automotive prowess. As everyone knows, we have just about held our ground; our auto plants are at capacity but their future is uncertain. No new builds are in the cards. Many auto jobs have been lost and they are not coming back.
We didn’t quite drop the automotive ball as badly as Australia — another economy that has been coasting for far too long on its natural resources — but our leaders must bear some of the blame for our sliding manufacturing performance.
The Stephen Harper Conservatives didn’t do much beyond the recession bailout (you may gripe, but it was the right move in my opinion) and the innovation funds.
Ontario Liberals didn’t fare much better because our province’s electricity rates are through the roof and are not conducive to manufacturing. Chrysler CEO Sergio Marchionne recently called out the provincial government for Ontario’s dwindling business attractiveness.
As the federal election draws near, I think it’s critical that voters carefully compare the automotive platforms of the three key parties. Not just in Ontario but all across Canada, Canadians should consider automotive and broader manufacturing policies when they cast their ballot.
An economy built on making things rather than digging stuff up is generally better prepared to weather the vagaries of a globalized economy (Germany is always a good example).
At the time of writing, only the NDP and the Tories had released any specifics on their plan for the automotive sector.
Thomas Mulcair has pledged more contributions for both the automotive and supplier innovation funds and some tax breaks on businesses accessing these funds.
He also promises more money for research and wants to work toward a comprehensive auto strategy by sitting down with key stakeholders within the first 100 days of forming a government. But the NDP leader has also made it clear that he won’t spend billions to attract auto investment.
The federal Tories are hinting at staying the course — which is keeping business taxes low, blaming Ontario Liberals for our automotive woes and pursing free-trade deals such as the Trans-Pacific Partnership. I agree that the TPP is an important deal, but Team Harper will have to strike better automotive content deals with countries such as Japan to ensure a level playing field.
The Liberals haven’t said much so far.
Whatever the outcome of the election, a dropping loonie, low oil prices and the resilience of Canadian parts companies have given us a small window of opportunity to take Canada forward again. Whoever comes to power later this month should know that this might well be our last. Kumar Saha is a Toronto-based automotive analyst with global research firm Frost & Sullivan.