By Roger Annis, Aug 3, 2012
The following is a previously unpublished article, written in July 2012.
The Canadian Autoworkers union issued a 53-page policy paper on April 16, 2012 that aims to convince governments in Canada to increase financial assistance to the auto manufacturing companies operating in the country and encourage the continued dominance of the private automobile in transportation.
Entitled “Rethinking Canada’s Auto Industry: A Policy Vision to Escape the Race to the Bottom,” the release of the 53-page document is accompanied by a public information and lobbying campaign for its proposals. That includes public forums in eight cities in southern Ontario. A dedicated campaign website has been created.
The union is asking people to sign a petition addressed to global corporations, urging them to invest in Canada. The petition is also addressed to Prime Minister Stephen Harper and Ontario Premier Dalton McGinty, asking to implement a “National Auto Policy to support the Canadian manufacturing footprint long into the future, and to convene a National Jobs Summit to develop an overall strategy for keeping good jobs in Canada.” The campaign has gathered several thousand online signatures since its launch.
The union’s position is summarized in ten “action measures” in the document. What is most noteworthy about the document and associated campaign is the extent to which it goes against the trends of progressive social action over the past several decades with respect to the environment and the role of governments in the economy.
The campaign for a National Auto Policy
Speaking to a press conference launching the campaign on April 16, CAW national president Ken Lewenza called on Canadian governments to provide the same kind of financial support to the auto industry in Canada that he says governments are providing in countries like Brazil, Korea and the United States. “They used every trick in the book to support their industries,” Lewenza said. Canada’s support does not match up, he says.
The CAW wants the federal and Ontario governments to “reward” companies that invest in Canada with tax credits, grants, training of skilled workers on the public dime, and other subsidies. The union also wants Canada to have a more aggressive trade policy that would punish imports by auto companies deemed to not sufficiently invest in Canada.
The union’s position paper cites three industries in Canada where it claims government support has been “successful” and whose example it would like to see followed–aerospace, shipbuilding and banking. Two of those industries are heavily dependent on war production for their success and have always qualified for a title made popular by former NDP leader David Lewis decades ago as “corporate welfare bums”. The third, the banks, are successful because, well, they’re the banks. They run the country, and every aspect of government policy, including lax taxation policy, is tailored to meet their interests.
The CAW published a parallel, 12-page paper in April 2012 on the aerospace industry in Canada. It calls for expanding government support to the already-heavily subsidized industry, a growing proportion of which consists of military production. The paper is titled, ‘Pulling Out of a Stall: Plotting a Renewed Course for Canada’s Aerospace Industry’.
More cars would be good news?
The CAW wants government measures to expand automobile ownership and use. “It is our expectation that motor vehicles will continue to be a core source of personal transport in the future, given their immense convenience and flexibility.” The union urges financial support for new manufacturing facilities, incentives for consumers to trade in old vehicles for new ones, and incentives for fleet purchases (of made-in-Canada vehicles) by government departments and agencies and by private businesses.
The call for support for the private automobile is totally at odds with the urgent need to tackle the global climate emergency. Humanity is facing potentially catastrophic consequences of rising greenhouse gas emissions. To avoid the worst of what could befall us, radical reductions in the burning of fossil fuels are required. An unavoidable consequence is to reduce the burning of fossil fuels for transportation. That means more public transit and less auto and air travel.
To have any hope of achieving reductions, the cities of the world must be redesigned to undo the terribly destructive legacy of the private automobile. The goal must be nothing less than elimination of private automobiles in urban areas for all but emergency purposes. This can be accomplished through a vast expansion of public transit and creating greater geographic harmony between workplace and residences for urban dwellers.
The CAW document acknowledges the climate challenge. It reads, “The CAW has always supported efforts to reduce the environmental footprint of the auto industry, and has advocated Canadian support for international efforts (like Kyoto) to regulate greenhouse gas pollution.” But this hardly meets the climate challenge. The Kyoto agreement was reached more than 15 years ago and contained exceptionally modest goals. It is hardly a benchmark by which to measure support for climate-mitigating policies, all the more because it has been repudiated by the Conservative government first elected in 2006.
The document refers readers to CAW’s climate policy website for further reading. The main document there is five years old and consists largely of stop-gap measures that may slow but will not halt rising greenhouse gas emissions. The emphasis of the website is promoting “green jobs”.
The CAW paper makes only the briefest of mentions of public transit. “The CAW also recognizes the huge economic potential associated with investments in public transit systems and other environmental priorities, again with due attention paid to the necessity of maximizing Canadian content in those projects (including through buy-Canadian policies governing transit equipment).”
The document perpetuates the false idea that there is such a thing as “green,” ie more fuel efficient, automobiles. A sub-section is titled, “Green Jobs Building Green Cars” and urges government support to producing them. “The challenge is to facilitate improvements in the environmental performance of those vehicles: with better fuel efficiency, alternative fuel systems, better operation and maintenance, better fuel quality, and ultimately through the development and use of non-polluting vehicles.”
Even the most “green” of automobiles, such as all-electric cars like the Nissan Leaf now being manufactured, are not the greenhouse gas-limiting measure that is claimed. The manufacture of these cars, the construction and maintenance of the network on which they travel and the energy source that feeds the electricity grid into which they tap are all major sources of greenhouse gas emissions.
The New York Times recently reported on a study by the Union of Concerned Scientists of the emissions of the Nissan Leaf. The study found that in the U.S. Midwest, where electricity is largely produced from coal, the most fuel efficient of gasoline cars actually produce fewer emissions than the Leaf, especially the best hybrids. On the U.S. west coast, where a lot of electricity is generated by hydro, the Leaf comes out way ahead. But even here, much of west coast electricity is produced by natural gas, which is not the “cleaner” fossil fuel it is claimed to be once all of the emmissions associated with its production are taken into account.
Financial bailouts of industry in the age of Occupy
Another area in which the CAW document goes against the grain is its call for massive assistance and bailouts to the auto industry. This is at the heart of much of the document and it goes completely against the call of the Occupy movement for governments to cease the subsidizing and pampering of capitalist families and enterprises and instead build an alternative, social economy.
The Occupy movement arose in the wake of the collapse of the international financial system in 2008. Its startling emergence was a response to the vast impoverishment that government policies favoring the capitalist one per cent have engendered.
The CAW posits that capitalist enterprises can be convinced or compelled to conduct themselves in socially responsible ways if offered enough money in the form of grants, tax breaks, other forms of public financial subsidy and trade policies that discriminate in their favor. But there’s little evidence that all this can achieve the stated goal in today’s world.
The union’s argument that countries like Brazil, Korea and the United States are models for Canadian policy to follow would be news to the citizens living in the smog-filled and traffic-paralyzed cities of those countries and to the trade unions that struggle for survival in the face of hostile governments and companies.
In the U.S., auto manufacturers have succeeded in reducing the starting wages of assembly line workers to startlingly low rates, in the $13 per hour range. Why should auto and other workers in Canada take the time and energy to pressure the Canadian government down that road when attractive models of social economies are beginning to emerge in other parts of the world, most notably in Latin America?
Canada’s petro dollar
The CAW document addresses an interesting feature of the Canadian economy that has emerged with the rise of Canada as a petro state based on its tar sands oil extraction. In recent years, the Canadian dollar is floating at or around par with its U.S. counterpart thanks to the vast wealth generated by natural resource extraction, including the tar sands of Alberta.
This has serious consequences for manufacturers in Canada whose final prices in world markets are 20 to 25 per cent higher than they were during past decades. The CAW says the dollar sits at 25 per cent higher than its “natural value”, ie its pre-tar sands value, in comparison to the U.S. dollar.
This problem was aired in 2012 by then-Ontario Premier Dalton McGinty in a public complaint about the negative impact of the Alberta tar sands on the value of the Canadian currency. But the issue quickly went away. If there are simmering tensions between oil producers and manufacturers, and if this has any long term political consequences, it’s not evident at this time.
* One of the authors of the CAW document is its chief economist Jim Stanford. He is the author of a popular book on economics-under-capitalism that is widely used in union education courses, titled ‘Economics For Everyone’. The book advances a Keynesian outlook. A Marxist critique of his book was published in February 2009, here.
Postscript: Two news articles
1. Ford gets investment boost from Ontario, Ottawa
By Greg Keenan, Auto Industry Reporter, The Globe and Mail, Monday, Sep. 16 2013
The federal and Ontario governments will contribute about $135-million to an investment Ford Motor Co. will make in its Oakville, Ont., operations that will secure the future of the company’s only Canadian assembly plant and 3,000 jobs into the next decade.
Ford will spend between $675-million and $725-million to retool the Oakville plant, which will assemble mid-sized crossover utility vehicles for North American and global markets, said sources familiar with an announcement scheduled to be made on Thursday by Ford executives and senior government officials. More Related to this Story
The auto maker has been negotiating with the two governments for more than two years on the future of the Oakville factory, which occupies a prominent location in Ontario’s industrial heartland.
The contributions by the two governments underline the importance of the auto industry and its high-paying jobs and what appears to be a commitment by Ottawa and Ontario to try to retain existing assembly plants, where every job generates an estimated 10 more spin off jobs throughout the broader economy. The government contributions to the Ford plant represent about 20 per cent of the total investment.
The auto industry is a particularly crucial part of the Ontario economy, which is home to all of the vehicle assembly plants in Canada and most of the 150,000 jobs in assembly and parts manufacturing. Vehicle manufacturing and auto parts represent about 2.4 per cent of the province’s gross domestic product directly and as much as 10 per cent when the contribution of other industries such as steel making, transportation and warehousing is included, according to Bank of Montreal estimates.
Although the two governments contributed more than $13-billion to the bailouts that saved Chrysler Group LLC and General Motors Co. from liquidation during the 2008-2009 recession, Ontario has been watching enviously since then as billions of dollars of investment by Ford, its Detroit rivals and other global auto makers flooded into the United States and Mexico.
The U.S. and Mexico investments, some of which involve the construction of new plants in Mexico, were also aided by government subsidies.
The plan to redevelop Oakville represents one of the largest single investments Ford has made since the end of the recession, which the company weathered without going into Chapter 11 bankruptcy protection and without bailouts by Washington, Ottawa and Ontario.
A study done on Ford’s Michigan Assembly Plant in Wayne, Mich. by the Center for Automotive Research, an industry think-tank in Ann Arbor, Mich., shows that Ford invested $8.9-billion (U.S.) at its U.S. and Canadian operations between 2010 and May 2012. Since then, it has also spent $555-million to add production of Fusions at an assembly plant in Flat Rock, Mich.
The investment in Oakville will enable the company to assemble the Ford Edge and Lincoln MKX crossovers on a global platform that also serves as the base for the mid-sized Ford Fusion and Lincoln MKZ sedans and is expected to be extended to other new vehicles.
Production of the current versions of the Edge and MKX will end late next year and assembly on the new platform will begin early in 2015, according to industry consulting firm AutomotiveCompass LLC of West Chester, Penn.
Assembly of the current versions of the larger Ford Flex and Lincoln MKT crossovers will continue on their current platform through 2018 and production of Edge and MKX will rise as the two larger vehicles are phased out.
2. Union urges Ottawa, Ontario to retain GM shares
By Greg Keenan, Auto Industry Reporter, The Globe and Mail, Sept. 12 2013
The union representing about 40,000 auto workers in Canada is urging the federal and Ontario governments to keep their shares in General Motors Co.
Jerry Dias, leader of the new Unifor union, made the case with federal Finance Minister Jim Flaherty and Ontario Finance Minister Charles Sousa in a letter sent after the governments announced earlier this week that they were selling about 30 million of their 140.1 million shares in the auto maker. The sale raised about $1.1-billion (U.S.) for the two governments. More
“It is essential that we use every tool in the policy tool box to ensure that GM and other auto makers in Canada retain and grow their operations here,” Mr. Dias said in the letter.
Governments need to play a key role in helping win future investment commitments by vehicle manufacturers and if the governments hang on to their remaining shares, they will be able to do that, he said.
The federal and Ontario governments contributed $10.8-billion (Canadian) to the chapter 11 bankruptcy bailout of GM that kept the largest Detroit auto maker from being liquidated.
Mr. Flaherty said earlier this week that the investment in GM was always intended to be temporary. GM has repaid about $1.5-billion worth of loans. The two governments sold about 35 million shares in the initial public offering of the new GM in November, 2010.