New labour laws in Michigan will not hurt Ontario’s ability to remain a manufacturing powerhouse and compete for new investment, says Liberal leadership contender Sandra Pupatello.
Michigan joined other U.S. states where wages tend to be lower by adopting a right-to-work law last month. Right-to-work laws, which prevent mandatory union membership in the workplace and allow people to decline to pay union dues, were first adopted in the southern U.S. states decades ago to lure manufacturing jobs.
With Michigan becoming the 24th state to adopt such a measure, it is now gaining prominence in Ontario, because the Great Lakes state is a traditional rival for investment in the manufacturing sector. Progressive Conservative Leader Tim Hudak is promising to enact such legislation if he becomes premier.
“I felt like, from a political perspective, he was handing me a gift when he talked like this,” Ms. Pupatello told The Globe and Mail’s editorial board on Tuesday.
Ms. Pupatello, a former economic development minister in Premier Dalton McGuinty’s government and the front-runner to succeed him this weekend, said the right-to-work legislation adopted by Tennessee, Alabama and Georgia did not impede Ontario’s ability to attract new investment, even when the province’s manufacturing heartland was grappling with a recession back in 2006.
“We were going head to head with them and we were winning,” she said.
The legislation might have helped those southern states competing against Mexico, where labour costs are much lower, Ms. Pupatello said. But Ontario and Michigan have never marketed themselves on the international stage as cheap labour jurisdictions, she said.
“The idea that Michigan can pass such a law is folly,” she said.
Corporate executives do not make investment decisions based solely on labour costs, Ms. Pupatello said. What tends to be much more important, she said, are the tax holidays and other incentives governments are prepared to put on the table to lure investment.
“We in Ontario have always said we are never going to have hundreds of millions to just throw at companies,” she said. “We have to be very selective in who we chase and what we will ultimately land.”
Ms. Pupatello, who is widely seen as the establishment choice to become the next Liberal leader and premier, praised the McGuinty government’s decision to participate with Ottawa in a $13.7-billion bailout of the North American auto sector. The unprecedented investment, she said, essentially saved Ontario’s auto manufacturing.
She said the province will have to continue investing in the sector, but on a much more selective basis because the days of auto companies building big plants are “pretty much done.”
Just before Christmas, General Motors Co. announced that it will shift production of the Camaro out of its assembly plant in Oshawa, Ont., to a plant in Lansing, Mich. The future of several thousand jobs at the Oshawa plant depends on the success of the redesigned Chevrolet Impala.
Ms. Pupatello said she is much more qualified than her opposition rivals to “hit the ground running” and talk to top executives at GM.
“I want us to be aggressive on this front,” she said. “It may have been a good production decision for them to move that Camaro, but it does leave an opportunity to be back-filling with an additional product or additional volume of the other products.”