COVID-19 border rules create roadblocks for Canadian auto industry

Some Canadian automotive suppliers say they are losing millions of dollars in new U.S. business because of problems getting clients, technicians and other essential workers across the Canada-U.S. border.

They blame inadequate COVID-19 border rules and unpredictable enforcement by border guards, saying the restrictions fail to recognize the highly integrated nature of the North American auto industry.

“I’ve already lost 10 per cent of my sales [in 2021] and am on the verge of losing a third of our business because our customer said: ‘I’m traveling from South Carolina. If I can’t get in to see you, I can’t give you the contract,’ ” said Jonathon Azzopardi, CEO of Windsor, Ont.-based Laval Tool & Mold Ltd. and chair of the Canadian Association of Mold Makers (CAMM). “I get emails about this every day from our members.” Azzopardi said the situation has worsened over the course of the pandemic.

A recent survey of 39 Ontario tool and die and mold-making businesses, as well as automation companies, showed that 69 per cent of respondents lost U.S. contracts because of border issues, said Azzopardi.

Individual estimated financial impacts ranged from $100,000 to more than $5 million.

“The real root cause is the failure on the [Canadian] government’s part to think you can export goods without the mobility of people across the border,” Azzopardi said. “They go hand in hand. The engineer, the salesperson and the technician are as important as the truck driver who takes the goods across the border.”

If companies can’t fill their order books, they’ll cut jobs, relocate or even close, said Shelley Fellows, chair or Automate Canada, which represents industrial automation suppliers. Half the respondentsto a recent Automate Canada survey complained they were experiencing problems with the border, she said.

The federal government announced the border restrictions on nonessential travel in March to prevent the spread of COVID-19. The restrictions have been extended throughout the crisis and will remain in place until Feb. 21.

“While these decisions have not been taken lightly, we know that they are necessary to keep Canadians safe,” said a spokeswoman for Public Safety Minister Bill Blair, whose responsibilities include border services.

The government recognizes the importance of maintaining cross-border supply chains between Canada and the United States “to ensure the continued flow of goods, including food and medical supplies for all Canadians,” Mary-Liz Power wrote in an email to Automotive News Canada.

Restrictions at the border are evolving based on the best public health information available, she said. “We continue to work with our partners across government and with commercial stakeholders to provide assurances that commercial traffic is not impeded.”

TO PASS, YOU MUST PROVE IT

Under those border restrictions, anyone from the United States who wants to enter Canada must prove to border agents that the purpose of the trip is not optional or discretionary.

As well, all travelers entering Canada — including Canadians — are required to quarantine for 14 days, unless they qualify for an exemption.

Two of the exemptions could apply to the auto suppliers’ situation, said Henry Chang, a partner in the business immigration group of Dentons Canada LLP in Toronto. They include exemptions for technicians and specialists involved in maintaining equipment essential to critical infrastructure, such as health care and transportation, and for regular border crossers who work in essential services.

“In terms of the exemption for technicians and specialists, it is more for the handson people, not the president of the company,” Chang told Automotive News Canada. “You also have to prove there’s an urgency for this exemption, why you can’t wait 14 days.”

The other exemption, for regular border crossers, could potentially be used by senior auto industry managers and executives if they are supporting essential services in Canada and are crossing the border frequently enough, he said.

Whether someone will qualify for the quarantine exemption can be difficult to predict, Chang said.

“I quite often hear stories from applicants. They’ll say, ‘My colleague or my competitor got in with this, and you’re telling me that it’s not sufficient,’ ” Chang said. “Most of the time, if a client’s facts clearly fit the eligibility requirements, they can receive an exemption. Even if they don’t, they may still get in at the discretion of the officer.”

Those restrictions and the way they’re enforced are making it difficult to do business, Windsor-area auto suppliers said.

Steve Del Duca, president of Ro-Matt International Ltd., which designs and builds welding and assembly systems, said officials of Volkswagen in Tennessee flew to Detroit to meet with his customer, a Tier 1 supplier, on Nov. 4 in Windsor to see a piece of equipment that Ro-Matt was building for them. They were denied entry at the land border.

YOU GET IN. YOU DON’T

Border enforcement appears to be arbitrary and unpredictable, said Don Rodzik Jr., corporate manager at The Narmco Group, a Windsor supplier of metal stampings and assemblies.

While Narmco has not lost any U.S. business, it faces ongoing inconsistencies at the border, he said. In late November, “we had OEM reps from the U.S. who were denied access to our facility. Another group of [customers] were able to cross at the same time with the same paperwork.”

The uncertainty could jeopardize future production, said Tim Galbraith, sales manager at Cavalier Tool & Manufacturing Ltd., a Windsor-area mold maker. “We’re negotiating some very large contracts for 2021. Invariably, what we’re hearing is, ‘Why should I place it with you when I can’t come and check you out?’ ”

The Canadian Border Services Agency (CBSA) and the union representing border guards both said the guidelines on who is or isn’t exempt from restrictions are clear and are being properly enforced.

“Being considered an essential worker or essential employee does not automatically mean the person is exempt,” Rebecca Purdy, a Border Services Agency spokeswoman, wrote in an email to Automotive News Canada.

“CBSA officers use the information available to them at the time the traveller is seeking entry into Canada to determine if the traveller is eligible to enter the country.”

“I can guarantee you I’m satisfied they’re following all the rules,” said Jean-Pierre Fortin, national president of the 11,000-member Customs and Immigration Union, whose membership includes border guards.

Multinational automakers said they’re also feeling the impact.

“Absolutely, it’s an issue,” said Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, which represents General Motors Canada, Ford of Canada and Fiat Chrysler Automobiles Canada. “Whether it’s repairs to an existing piece of equipment or installation of new equipment, there’s no longer any certainty around when you can get that done.”

Canadian automotive suppliers have noticed border restrictions tightened with the second wave of COVID-19 in the fall.

BUSINESSES WANT CERTIFICATION PROGRAM

“What we’re hearing is this is impacting small and medium-size business more than larger industries,” said Marta Leardi-Anderson, executive director of the Cross-Border Institute at the University of Windsor. “Even if there’s a vaccine, it’s going to take time for people to get vaccinated.”

Auto suppliers said they would like to see the government introduce a certification program that identifies companies with safe COVID-19 practices, such as requiring masks and providing separate bathrooms and meeting rooms for visitors.

They also want to see the government create a trusted-traveller program, similar to Nexus, that identifies individuals considered essential to the industry, to remove the current uncertainty about who can cross.