When Justin Trudeau's Liberals came to power after the federal election in October 2015, it was thought by many in the auto industry that the days of the supposed Conservative cold shoulder were over.
In Automotive News Canada’s inaugural edition (July 2016), Unifor union leader Jerry Dias said, on the topic of industry investment, that he had had more discussions with Trudeau in the first year of his term than with Conservative Prime Minister Stephen Harper in the entire 10 years of his. Unifor represents about 23,000 workers at Ford, FCA and GM plants in Ontario, so a union leader talking about industry investment is just smart as is having a receptive government.
The Liberal government has been quiet, however. Too quiet, actually, leading us to wonder if it was as receptive to the auto industry as was thought in the beginning.
There’s reason to be impatient. On page 17 of the January 2017 issue, in a story by Steve Mertl about the collapse of auto manufacturing in Australia, the blame was squarely on the shoulders of a federal government that stopped subsidizing the industry. The country went from 16 factories to none and the story’s sources predicted that, without a significant federal policy change, Canada could wind up without an auto industry by 2050.
Why does Canada’s auto industry need federal subsidies? In the words of Canada’s Car Czar, Ray Tanguay, without them he has nothing to sell. Nothing to entice business to set up shop in Canada instead of Mexico or the southern U.S. states, where new auto investment is heavily subsidized.
But just as we began wondering about the silence, on Jan. 9 our reporting staff discovered that the federal Automotive Innovation Fund had begun to offer grants instead of repayable loans, to the tune about $500 million a year through 2021. The details can be found in two stories on Page 4 of this issue, but the money is definitely real as the Liberals immediately steered $41.8 million toward a $492-million upgrade to Honda’s plant in Alliston, Ont., which builds the Civic and CR-V.
There are some conditions and the feds get a pat on the back for those. The money will be doled out on a preferred basis for job creation, plant longevity and, perhaps most interestingly, for technical innovation and environmental concerns.
Is this the right move? Well, Ray Tanguay is a happy man now, and if this is just the beginning of federal assistance for the auto industry, then so are we.