Will Canada Lose Its Auto Industry Like Australia?
7
Sponsored Links
Many Australians are not happy that its automotive manufacturing industry is escaping to other countries, and for good reason: jobs and national pride, among other things, are at stake. Ontario, Canada’s Financial Post feels that the same thing can happen to them.
“Demise of Australia’s auto industry a ‘cautionary tale’ for Canada” shows parallels between Australia’s market conditions and how the Big Three has shifted production to Mexico, which has much lower overhead. When General Motors’ (and Chrysler’s) production commitments expire in 2017, what’s next?
“I think it (the Australian car-making industry’s fall) is a cautionary tale for Canada,” says chief economist at blue-collar workers’ union Unifor, Jim Stanford.
Australia’s problems really began over 30 years ago when the country eliminated vehicle tariffs and introduced more foreign competition, especially from Asia. Next came a strong Australian dollar and then the government’s decision to end subsidies for the auto industry.
However, the comparison is not quite an apples to apples item: Canada has the U.S. as its neighbor to feed its industry, while Australia is isolated from all surrounding countries.
As Australian production continues to wind down (Ford for 2016, GM’s Holden for 2017), production from other countries like Mexico and Argentina have picked up, accounting for almost 8,000 new-car sales this year, according to GoAuto.com.au. And in a change from production over 40 years ago, no Canadian vehicles are imported to Australia.
- Sweepstakes Of The Month: Win a 2023 Corvette Z06 Convertible. Details here.
Sponsored Links
In a word, yes.
From a car enthusiast perspective, no problem, since Canada doesn’t have a car company like Holden. So no Commodores and Falcons will reach the finish line.
But like Australia, Canada is a fantastic country and I wish them the best.
There are a bunch of factors at hand, but the biggest element I think is that 10+ years ago the Canadian dollar was only worth about .70 USD. This made it very attractive to build high volume stuff like the W-body in Canada. As the dollars have evened out in the last 5 year, that gap is basically non existent.
A lot of Canadians also identify the 08 loans as a corporate handout made by an unpopular federal government, so right or wrong GM is now tied to an unpopular side of federal politics. Read any news article comment forum and you’d swear GM is stuck in 1987 the way people seem to view them.
But in the global world, ultimately the auto makers (GM< Ford, VW) are big enough to pressure local state/province/country governments to get whatever tax breaks they can in order to build cars (Tennessee and South Carolina are prime examples). The current trend is that Canadian governments don't seem to be prepared to give as much as other places.
Exchange rate is part of this but the jobs are going where two other factors are in play.
#1 There is more plants than production and the MFG’s can shop the new models around to the plants that have the most cooperating union.
#2 The MFG’s can do the same with local governments as they can see who will give them the best tax breaks too. Many communities have found that give on the taxes and they often get more back in return.
#3 With the better MPG the companies no longer have the advantage of moving the larger models out of the country and counting them as imports anymore.
Compared to Canada there is definitely more of a loss of pride in Australia due to the fact we have our own brand in Holden and Ford Australia had a well established local identity too. We also had the ability to design and engineer our own unique vehicles that to the best of my knowledge Canada doesn’t have. Cars are a very personnel thing and usually the second biggest investment an individual will make so the loss of Australia’s car industry is more of a blow to pride than if Canada lost Blackberry or Bombardier because of the aforementioned reasons.
Canada just needs to asses whether the amount of money from the taxpayer going into the car industry is worth the return on investment. This is what has happened in Australia and in the end the government decided we weren’t getting enough out of it so no more co investment.
In the past few weeks the Australian motoring press has been focusing a lot of attention on a company called Performax international. Performax are a company in Queensland that do RHD conversions for US pickup trucks and apparently do a damn good job at it. They recently took on a bunch of ex Holden and Ford Australia engineers and a few weeks ago received type certification for Ford super duties meaning they can sell them like a manufacturer selling a brand new car. They are preparing to ramp up and expand production fairly significantly soon.
Just an example of the niche direction that our automotive industry is heading once Ford, Holden and Toyota close up shop. Food for thought for our Canadian friends.
One more thing here the Canadian and Australian issues share some fiscal exchange rate issues but that is about all. Canada is not isolated and did not have their own division.
While Holden has exchange rate issues the fact is they are an isolated market and they sell less cars than Pontiac did when they left the market. Their issues were just like nearly every other MFG in the country down there economic. Limited sales and high development cost with no chance of real major exports on a larger scale.
If the climate was right ever MFG could build the export from there but that is not the case and the in country market is not large enough to support the industry or division on their own anymore.
Canada on the other hand has some room to work be in North America but because a host of issues they are losing ground. They either find a way to export or they lose their auto MFG as they can never see enough in country to maintain a full market. It is much too easy to move MFG out of the country.
Yes and it will in the end be a positive step . I think the provincial and federal governments are fed up with the demands by American manufacturers who dangle potential big job losses if the governments don’t cough up the many millions these companies want for expansion or to build new plants . This game is played all over the world and it stinks , plus there has been a consolidation of the manufacturing back to the US to cut back on imports , so they close the Canadian plants anyway . This country has been building vehicles for the big three for many years and its time to do so for ourselves . We need to get hungry like the Americans . It’s right and proper , they think , for us to buy their vehicles , about 90% of all our commercial and military aeroplanes etc , but god forbid that we sell them some well made buses . The numerous protests about a President using a Canadian bus for tours were so typical , now he’s announced that buses will have to be manufactured in the USA . You know , this attitude is likened to having some relatives over for supper and they attempt to eat everything on the table , you’re just happy they don’t live in the same house !