It’s time for a truly Canadian automaker
Acquiring GM Canada saves jobs, builds economic sovereignty
It’s time to give serious thought to creating the country’s first Canadianowned automaker. The announcement by General Motors Co. (GM) that it is assigning no new products to GM Canada’s landmark Oshawa plant after 2019 puts the facility’s future in doubt.
Nationalizing GM Canada is a compelling proposition. It would not only save jobs but create them, as Canada repatriated the engineers, designers and experts in advanced manufacturing who have been obliged to make their careers abroad.
It would be a significant advance in economic sovereignty, in a Canada that is stunted by its status as the world’s biggest branch-plant economy.
Canada is one of the world’s biggest and oldest automaking jurisdictions. We were building motorized vehicles in Southern Ontario for about half a century before what is now Toyota Motor Corp. began its transition from bicycle to vehicle maker.
Yet Canada is one of the very few major automaking regions without an automaker of its own. Germany, with Volkswagen, and South Korea, with Hyundai/Kia, built major automakers from wartime ruins. And an Elon Musk erratic in his ambitions managed with a 15-year-old start-up, Tesla Inc., to force the global industry to commit heavily to electric vehicles (EVs).
GM Canada is no start-up, but an entrenched powerhouse whose change in ownership would make it stronger still. Its parent, after all, drove itself into bankruptcy less than a decade ago, and GM’s complacent corporate culture has not changed since.
It is not a coincidence that Magna International and Linamar Corp., the independent, Canadian-owned autoparts giants, are among the most innovative firms in the global auto industry. And they have the growth potential that comes with being multinationals. By contrast, the Detroit Three automakers and Southern Ontario latecomers Toyota Motor Corp. and Honda Motor Co. Ltd. exist mostly to supply the U.S. market.
We were just reminded of the dangers of being held hostage to that market when Ottawa signed a free trade deal with the U.S. that it dislikes. It did so because U.S. President Donald Trump threatened to eviscerate the Canadian economy with a tariff of as much as 25 per cent on U.S. vehicle imports from Canada, with an estimated loss of 186,000 Canadian jobs.
What a bizarre turn that was. The U.S. threatening to weaken, if not destroy, U.S. firms in Canada that have been hogs at the trough of Canadian corporate-welfare largesse.
One of them, GM, was bailed out in 2009 in part by Ottawa and Queen’s Park to the tune of about $10.8 billion. The U.S.Canada bailout of GM saved about a million American jobs. Now this.
But then, the Detroit Three automakers have for decades subjected Southern Ontarians to traumatizing actual and threatened closure of assembly and parts plants.
They’ve never even built cars for the unique Canadian market, save the occasional cheesy “rebadged” version of a U.S. model.
Despite the repeated threat of closure at GM Oshawa, or perhaps because of it, the plant’s remarkable 2,690 employees have made that facility among the highest-ranked in the global industry in both product quality and productivity. While GM Oshawa is the current focus, ultimately the fate of GM Canada is on the line. After all, Oshawa is GM Canada’s crown jewel.
And so, we have a decision to make. A while back, GM killed the Australian auto-manufacturing industry by closing its venerable Holden division there. Canberra’s blasé reaction was to reconcile itself to Australia no longer participating in one of the world’s most important industries.
Obviously, Canada has that option. Just accept the jeopardized status of GM Oshawa, and pray the rest of GM Canada doesn’t eventually meet with a similar fate.
But there’s a more compelling option, an act of economic nation-building.
By purchasing GM Canada in its entirety, Canada would own a major, vertically integrated automaker. GM Canada operates assembly and parts plants, engineering labs, distribution centres, a nationwide dealership network and a coldweather testing centre in Kapuskasing. Why would we buy GM Canada? It is a 20th-century manufacturing business, many would say, when our focus should be on homegrown artificial intelligence (AI), alternative energy and other 21st-century technologies.
Would it be viable, or another ill-fated Bricklin? And do we have the money and inclination to do this?
We do have the money. Canada’s four largest public-pension funds alone command more than $1 trillion in assets. Ottawa would eventually spin off the new auto company to the private sector, as it did with Air Canada and Canadian National Railway Co.
As to inclination, the Harper and Trudeau governments blocked no fewer than four foreign takeovers deemed counter to Canadians’ best interest. And the Trudeau government has nationalized the Trans-Mountain pipeline project. The goal is to liberate Canada from its reliance on the U.S. as sole market for Canadian oil. We would invest in a Canadian-owned automaker because the global auto industry is at the forefront of technological innovation, including the AI that is key to EVs and driverless vehicles.
GM Canada is no Bricklin start-up, but a deeply entrenched, multibillion-dollar enterprise with significant market share.
As noted, a truly Canadian and independent automaker would attract the auto world’s brightest talent. And its creation would encourage all branch plants to get into line as responsible Canadian citizens.
Confronted with the possibility of confiscation of its entire 110-year old investment in Canada, GM would negotiate a fair-price sale of GM Canada. The deal would include the new firm’s continued ability to sell the strongest GM-branded products in Canada, Chevrolet and GMC, while taking a pass on slow selling Buick and Cadillac. A rechristened GM Canada would design vehicles for Canadians. And, learning from that, it would devise winning vehicles for niche markets worldwide, becoming a geographically diverse firm. It would export to both major and emerging economies. The latter are the world’s fastestgrowing markets, where “Canada” has high and favourable brand recognition.
And an independent Canadian automaker would no longer be yoked with production of marginal GM products, which has repeatedly been GM Oshawa’s fate. There would be some who would fret that Canada was becoming “closed to business” by effectively seizing a sizable foreign asset. To which the response is that there’s no point being open to businesses that act against the Canadian public interest.
According to the old expression, one either acts or is acted upon. We have allowed GM to act upon us in disagreeable ways long enough.
There are other examples of injurious branch-plant impact on Canada. But for now, let’s make an example of GM. And we’ll see how it goes from there.