The partial reopening of the Canada-U.S. border is a welcome development for the domestic auto sector, although a host of challenges — including rising COVID-19 cases in the United States and now Canada and the ongoing global microchip shortage — are creating uncertainty for at least the foreseeable future, industry experts say.
“It is great news in that Canada is reopening the border,” said Jeanine Lassaline-Berglund, president of Automate Canada and the Canadian Association of Moldmakers (CAMM). “For many of our suppliers and customers coming from the U.S., the relationships with Canadian organizations have been fairly strained because of the lack of being able to connect beyond virtually.”
As of Aug. 9, Canada is allowing nonessential travellers from the United States to cross the border without quarantine if they’re fully vaccinated and test negative for COVID-19.
Pandemic restrictions on nonessential travel into the United States have been extended until at least Sept. 21, however.
“So getting across the border, for us, for all intents and purposes, has not changed,” LassalineBerglund said.
‘ESSENTIAL’ STILL ESSENTIAL?
Questions remain about whether Canadians who received vaccines not approved in the United States, including Astra-Zeneca and mix-andmatch doses, will be able to cross the border without quarantine, she said. Confusion also lingers over essential-worker status for auto industry personnel, Lassaline-Berglund said.
The reopening “is welcome but overdue, and we should still have greater openness at the border for essential persons and a broader definition of essential persons,” said Rob Wildeboer, executive chairman of Martinrea International Inc.
In terms of a reciprocal opening by the United States, going south has not been a problem, he said.
“There’s a pretty good recognition there that if you’re in the auto business and the auto parts business that you’re there for a reason,” Wildeboer said.
BARRIERS AT THE BORDER
With COVID-19 infection rates surging in many U.S. jurisdictions and Canada, a number of potential roadblocks lie ahead.
The U.S. administration has given no indication that border restrictions will not be further extended come Sept. 21. The Department of Homeland Security has said the agency is in contact with its Canadian and Mexican counterparts “to identify the conditions under which restrictions may be eased safely and sustainably.”
Speculation exists that the politically fraught reopening of the southern border with Mexico is spurring U.S. hesitance regarding reopening. For CAMM members, resolution of the border problems means that the opportunities of the United States-Canada-Mexico Agreement (USMCA) might finally be realized, Lassaline-Berglund said. While the agreement officially went into effect more than a year ago, the pandemic delayed its impact on the ground.
The supply-chain frailties highlighted by the global crisis mean that further opportunities could arise in onshoring the supply chain, she said.
“You can’t help but think that there might be opportunity for the future as buying decisions maybe turn an eye back inward toward a North American strategy,” Lassaline-Berglund said.
David Adams, president of the Global Automakers of Canada, which lobbies on behalf of import-based automakers, said it’s difficult to predict the impact of the USMCA, with the situation so far from normal.
“I think the jury’s still out whether things are more or less normalized,” Adams said, referring to the surge of COVID-19 cases in the United States, in particular.
NO RETURN TO PRE-PANDEMIC
Even if no further shutdown and travel restrictions occur, caution will persist for some time, he said.
“I still don’t think things are going to go back to sort of what they were like pre-pandemic,” Adams said. “I think there’s certainly an opportunity for everybody to make up lost ground. But I think people are going to be approaching those discussions, those business relationships, just a little bit more eyes-wide-open about what the future could hold.”
Despite the border reopening, supply problems such as the shortage of microchips remain, and that is unlikely to be sorted out until early next year, Adams said.
“It’s still going to require some other things to fall into place before we can go back to a situation where we’ve got our supply chain sorted out where we’re able to build all the vehicles that we want, and we can move forward,” he said.
The microchip shortage has been and remains a bigger problem than the border issue, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
“The effective reopening for cross-border travel for the vaccinated has been helpful,” Volpe said. But manufacturers have been forced into temporary shutdowns due to the shortage, he said.
“How do you determine the health of a market when you’ve got demand you can’t satisfy because you can’t finish the production of the vehicles they [customers] want?” he said.
Everything from the pandemic to the microchip shortage, and new compliance rules under the USMCA, Volpe said, “just makes 2021 probably a worse year than 2020.”
With files from John Irwin.