Automotive News Canada - May 2019 - 10

OPINION

05.19

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Carbon tax just the latest setback
for Canada's auto manufacturing

For good reason, GM Canada President Travis Hester appears
happier than Unifor President Jerry Dias about the company
converting Oshawa Assembly to a parts-stamping plant.
PHOTO: GM CANADA

GM's $170M buys peace
over Oshawa debacle
JEFF MELNYCHUK

EDITOR-IN-CHIEF

OF ALL THE POSSIBLE OUTCOMES REGARDING THE ANNOUNCED
end to vehicle production at GM's Oshawa Assembly plant, I don't
think many people anticipated this particular scenario.
According to a Page 1 story - news that first broke at
automotivenews.ca - the plant that currently builds the Chevrolet
Impala and Cadillac XTS, and completes the final assembly of the
previous-generation Chevrolet Silverado
and GMC Sierra, will become a stampFor the $170 million
ing plant. In effect, it becomes a supit's spending on Oshawa plier, potentially to other suppliers.
This is indeed a divergent business
Assembly, GM is buying
model for GM, but at this point the
time, some positive
precise motivation is unclear. Does GM
press and possibly the really want to go down this path, or is
it making the best of a miserable pubsilence of Unifor.
lic-relations situation? The arguments
complement each other. Oshawa has expensive stamping equipment that otherwise would have been collecting dust once vehicle
production ends, and it's in the company's best interest to throw
Canada a bone, this one to the tune of $170 million to convert the
plant for stamping and retain about 300 employees. Bear in mind
that this hardly saves Oshawa, per se, since it currently employs
about 2,600 people. In the 1980s, the number was about 23,000.
GM's accompanying "at-least" 10-year commitment to the footprint does, however, indicate an honest stab at being a supplier. And
although there appears to be zero plan to bring new-vehicle assembly back to the plant anytime soon, the 10-year commitment keeps
hope alive that the once-award-winning facility could again churn
out vehicles. A lot can happen in 10 years. With the accompanying
announcement of an on-site autonomous-vehicle test track (part of
the $170-million investment), it seems natural that Oshawa
Assembly could one day build those vehicles, in whatever form they
take. If GM's announcement is intended to keep its options open,
that's probably a smart play.
The downside, at least for the city of Oshawa, is that GM's decision kills the idea of a plant sale to another automaker, or a company such as Magna that hinted Oshawa Assembly - or a site like it
- could work as a low-volume-vehicle contract-assembly plant. In
that regard, hope for thousands of new jobs appears to be gone.
The big win for GM, however, is that the decision - announced
after discussions with Unifor - effectively gags the union's negative-GM press (for the time being). That alone might be worth $170
million. - ANC

EST. 1925.

PUBLISHED WEEKLY BY CRAIN COMMUNICATIONS, INC.
KEITH E. CRAIN, EDITOR-IN-CHIEF
K.C. CRAIN, GROUP PUBLISHER
JASON STEIN, PUBLISHER

DAVE VERSICAL, CHIEF OF EDITORIAL OPERATIONS, AUTOMOTIVE NEWS GROUP

PUBLISHED MONTHLY BY CRAIN COMMUNICATIONS, INC.

NEWS DEPARTMENT

JEFF MELNYCHUK, EDITOR-IN-CHIEF, 506.854.5024, JMelnychuk@autonews.com
GRACE MACALUSO, MANAGING EDITOR, 226.787.0441, gmacaluso@crain.com

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CANADA'S BATTERED AUTO INDUSTRY HAS
bours a more positive view of Canada's competibeen taking hit after hit - a pummeling made
tiveness. But David Adams, president of the
worse by Ottawa's decision to impose a carbon
Global Automakers of Canada - which reptax on Ontario, Manitoba, Saskatchewan and New
resents Toyota, Honda and other overseas brands
Brunswick.
- warned that the carbon tax, which raises the
"There's another thing that goes on the wrong
cost of gasoline by 4.4 cents a litre, will hamper
side of the ledger," said Mark
new-vehicle sales.
Nantais, president of the
On the factory floor, the tax
Canadian Vehicle Manufacturers'
will kick in if carmakers emit
MANAGING EDITOR
Association (CVMA). "That in itself
emissions exceeding 80 per cent
may not generate the decision
of a heavy-industry average, a
GRACE
not to invest or close a plant, but
formula that doesn't work for the
MACALUSO
it's the aggregate effect."
CVMA because of the sector's
Already saddled with soaring
high trade exposure. Nantais
electricity rates, the auto sector
also wants Ottawa to return revCOMMENT
enue generated by the tax to
has struggled to maintain its
carmakers to invest in fuel-effimanufacturing footprint in a country long derided as a high-cost jurisdiction.
ciency initiatives.
Recent hits include General Motors' plan to
"If we don't get any of this revenue back to
cease producing vehicles at its Oshawa, Ont.,
reinvest in the plant, then it's just a tax that our
plant by the end of the year, and Fiat Chrysler
competing plants in the United States don't have
Automobiles' intention to kill the third shift at its
to pay."
Windsor minivan plant in
The CVMA is making its case to Ottawa as part
The comof ongoing talks aimed at finalizing details of the
The auto sector September.
bined job cost: At least
federal carbon pricing regime.
has struggled
3,500 hourly workers,
Automakers, Nantais said, want to do their
plus thousands more at
part to reduce C02 emissions. But if they're
in a country
feeder plants.
forced to shift production to Mexico or the southlong derided
A bright spot along
ern United States, where environmental regulaas high-cost.
this bleak landscape is a
tions aren't as stringent, Canada will lose not only
$1.4-billion investment by
auto manufacturing but its campaign against cliToyota Motor Manufacturing Canada in its Ontario
mate change.
plants, which received a new global platform to
Between 2004 and 2012, Ontario was the
assemble the top-selling RAV4 and launch the
heavyweight champion of auto production, beatLexus NX luxury utility in 2022.
ing out U.S. jurisdictions including Michigan. If
Citing government support to the tune of $220
Ottawa heeds the industry's concerns, it will give
million, plus technological innovations, Toyota harthe sector a fighting chance in the ring. - ANC

New federal ZEV-rebate program gives
industry zero lead time and few details
CANADA HAS ITS NEW REBATE
program to encourage shoppers
to go electric, hybrid and hydrogen fuel-cell vehicles over those
powered by internal combustion.
The rollout, however, was as
smooth as a corduroy road.
Ottawa has been hinting at a
national rebate strategy for
zero-emission vehicles for almost
as long as Automotive News
Canada has been in existence.
(We launched Canada Day
2016.) An elephant births a
baby - 640 days of gestation
- faster than
the federal
An elephant government
births a baby pens a policy.
it
faster than wasWhen
finally
the feds pen time to deliver, the
a policy.
$300-million
Incentives for
Zero-Emission Vehicles program
was unveiled in dribs and drabs,
beginning with the federal budget March 19. The budget
revealed few details beyond the
rebate of up to $5,000.
Even the original list of eligible vehicles wasn't immediately
known. And after it was made
public, the list was sparse. In the
wake of Fiat Chrysler
Automobiles' cutting its third
shift at the Windsor, Ont., minivan plant, the hybrid Pacifica
suddenly qualified. Then a few
more made the cut. The final list

"You might need to cut [the
federal government] a little bit of
slack," he said.
The reality was automakers
and dealers weren't given time
GREG
to digest what was about to go
LAYSON
live.
Dealers were worried there
wouldn't be enough available
COMMENT
vehicles by May 1 because manufacturers had already allotted
now includes 28 vehicles.
most of their 2019 stock.
But then we didn't know how
"[W]e are going to have more
the program worked. Was the
demand than the supply will
rebate to be a tax credit? Was
allow," warned David Bare, dealthe consumer or the dealer
er principal for Harris Kia in
reimbursed?
Nanaimo, B.C.
On April 17, I tweetBob Redinger, a
ed: "It starts May 1. But
Mississauga, Ont.,
consumers and dealers
Honda dealer, had a difwon't know HOW the proferent concern. He was
gram works until 'by April
worried that the federal
30,' ... And what about
initiative would have
the automakers? How
problems similar to
are they supposed to get
Ontario's defunct proinventory moved around
gram, which saw some
Ontario
(or adjust production) in
dealers
wait months for
Honda
13 days?"
hundreds of thousands
dealer Bob
A week before the
of dollars in repayment.
Redinger
program was to begin,
"I'm scared we're
worries the
dealers had no idea how new ZEV
going to be waiting all
it was to be run. A webi- program
over again," he said.
nar was coming, they
Transport Canada's goal
will leave
were told, but when?
is to issue payment withdealers
Mark Nantais, head of waiting for
in 20 business days after
repayment. receipt of an application.
the Canadian Vehicle
F I L E P H O TO
Manufacturers'
But if history has
Association (CVMA),
taught us anything about
couched his words carefully,
ZEV policy in this country, nothwarning of a "bit of a settling-in
ing moves that fast or that effiperiod."
ciently. - ANC
DIGITAL AND
MOBILE EDITOR
AUTOMOTIVE
NEWS CANADA

http://www.automotivenews.ca

Automotive News Canada - May 2019

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