Published Saturday August 2, 2014
In January 2013, the Canadian federal government pledged $250 million towards the renewal of an innovation fund for the automotive industry. The fund is intended to keep auto plants open and to protect Canadian automotive jobs.
This announcement was welcomed by the auto industry and by most of its partners and stakeholders, and it demonstrated the feds' ongoing commitment to supporting an industry that is struggling to reinvent itself and stay competitive in an increasingly competitive global marketplace.
There have been other initiatives by the federal and provincial governments to support the auto industry of late, including a new free trade agreement between Canada and South Korea. But the question remains: Is Canada doing enough to maintain its competitive edge in this important sector, especially in light of Ontario losing its vehicle output ranking to Michigan in 2013 (a position it had held since 2004)?
The Canadian auto industry is one of the driving forces of our economy and has been for decades. Ontario alone is home to five of the world's top automakers and more than 350 parts manufacturers (including Magna International), and the industry employs 90,000 skilled workers who produce 2.5 million vehicles, on average, per year.
Canada-wide, the auto industry is responsible for 440,000 Canadian jobs directly and indirectly and contributes enormously to the economic prosperity of Canada.
Auto manufacturing in Canada has a tradition that stretches back to 1908, when the McLaughlin Motor Car Company first set up shop in Oshawa. Over the past three decades, auto manufacturing has flourished with the addition of new assembly plants, millions in foreign investment and hundreds of spinoff businesses.
This impressive track record of success has been the result of labour, management and all levels of government working together to create a powerful industry.
But the Canadian automobile industry is at a crossroads and it's going to take renewed efforts from all stakeholders to ensure that it remains viable and competitive over the next 10 to 20 years.
As I see it, the two biggest potential disruptions are the reinvention of the automobile (new technologies, and alternative power systems), and foreign competition, principally from Mexico and China. Mexico's auto manufacturing sector has now surpassed vehicle production in France and Spain and it's attracting huge foreign investments from Europe and Asia.
Our auto industry is functioning well, but it could be argued that it's stagnant. We have a competitive advantage that we can't afford to squander. It's far too easy for complacency and greed to set in, and it doesn't take long for industry leaders to falter and fail.
What will it take for Canada to maintain its competitive edge on the world automotive stage? First off, we need an acknowledgment from all stakeholders (including the government and the public) and a stronger commitment to working together.
Secondly, we need all levels of government, post secondary schools, trade unions, auto manufacturers, and the public to voice their support for the auto industry in the loudest possible terms. We also need to stop relying on governments to come up with all the answers.
In 1950, the UK was the world's largest exporter of automobiles with dozens of marquee brands, such as Austin, MG, Triumph, the original Mini, Lotus and Vauxhall. The country had the potential to be a major automotive player for decades, but a series of bad economic policies, mismanagement and other factors led to the gradual decline of that industry.
Do we want the same fate for the Canadian auto industry? No. The auto industry is too important for our economy, our standard of living and our national pride to let it slip any further.
We need to stay competitive. The world is getting smaller.