I played college basketball and have been coaching for decades, so I know a thing or two about defence. Rest assured, Canada’s auto industry and governing politicians are going to be playing defence for a very long time.
They’ll be asked to justify the subsidies worth up to $13 billion they gave to Volkswagen to get the world’s biggest automaker to manufacture electric-vehicle batteries here.
When I read $13 billion, I had to read it twice. Then, I tweeted: “For a decade now, I've watched federal and provincial governments give tax dollars to automakers. But I’ve NEVER seen ANY NUMBER this BIG. Wow. Stunned.”
I continued: “This is monumental. I don’t know if it’s monumental in a good or bad way. This will be hotly debated for a LONG TIME.”
And finally: “What’s going to be lost here is the ‘over 10 years’ part of the agreement. People are only going to latch onto the enormous ‘$13 billion’ number. And, for good reason: It’s a stunning figure.”
And therein lies the rub for the government and industry: “$13 billion” is just too big a number for any editor — or columnist — to not put in the headline. It’s astronomical. The first of its kind in terms of size.
And boy, did people and pundits notice and naysay.
A sampling of headlines:
“Taxpayers get soaked by Volkswagen giveaway” (Toronto Sun).
“On the road again toward new bailouts with Volkswagen subsidy” (Financial Post).
“Does a country have ‘no choice’ but to subsidize its auto industry?” (Globe & Mail).
And then there was a somewhat valid point made by the labour publication Rank and File while the Public Service Alliance of Canada was striking: “Cough up the money, Trudeau! You did for Volkswagen!”
The biggest problem in this is the federal government’s messaging.
One auto executive bluntly told me it was “awful.” It’s true. This isn’t a one-time $13-billion blank cheque. There are stipulations attached, something those against “corporate welfare” have wanted for decades.
VW gets $700 million only after the plant is built. It then gets between roughly $8 billion to $12 billion more based on annual battery output; more batteries equal more money and likely more jobs and more money in the local economy.
But, again, $13 billion is such a big number it’s almost incomprehensible.
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, summed it up thusly:
“There’s a big franchise fee when you want to be in the major leagues. This is the second-biggest automaker in the world, and you want them to make their batteries here. It’s not going to come for free.”
And, it’s going to take a long time, and a lot of defence.