Not made in Canada

IF SIGNED, SEALED AND DELIVERED, THE TENTATIVE COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) RECENTLY STRUCK BY CANADA AND THE EUROPEAN UNION — WHICH WILL ELIMINATE TARIFFS AND PROVIDE OUR BUSINESSES WITH PREFERENTIAL ACCESS TO MORE THAN 500 MILLION C

The really bad news, of course, is that whatever happens, Ontario doesn’t appear to have a chance at regaining its lost crown as the top auto-producing jurisdiction in Canada and the United States. Thanks to an uneven recovery, Ontario’s auto sector, which gained the top-producing-jurisdiction title in 2004, is currently on track to assemble at least 100,000 fewer cars and light trucks than Michigan-based operations this year.

Based primarily in Ontario, Canadian automotive manufacturing has been on the decline since the late 1990s, when Canada ranked as the fourth-largest automaker in the world. Production peaked at around three million vehicles in 1999 and industry employment topped 150,000 as recently as 2007. The credit crisis and recession accelerated the decline. Between 2007 and 2009, the auto-sector workforce dropped below 110,000 as output dipped to less than 1.5 million units. Last year, despite a strong rebound in continental auto sales that generated an 18% increase in North American production, the Canadian auto sector built only 2.5 million vehicles and employed just 115,000 workers.

Moving forward, stronger demand should ensure further manufacturing growth in North America, but Canadian production (estimated by TD Economics to slip to 2.35 million this year, compared to 10.5 million in the U.S. and 3.1 million for Mexico) is expected to remain below pre-recession levels. According to autosector consultant Joe McCabe, Canadian output could decline as much as 25% by the end of the decade.

Don’t just blame the loonie or union demands. Money talks. And when it comes to offering investment incentives, Canada has been outbid by Mexico and U.S. states in recent years, winning only about 5% of new sector investments as a result. Even the two Detroit automakers that Canadian taxpayers helped save from the chop shop can’t be expected to maintain local operations without government incentives, especially after the production promises they made to survive bankruptcy expire in 2016. So the next time Canadian politicians decide automaker bailouts are a good idea, let’s hope they think longer term, or at least learn to negotiate more like union officials.