One day, ideally, we won’t have to subject ourselves to embarrassing spectacles like the one that unfolded this week.
Won’t have to beg the likes of Chrysler CEO Sergio Marchionne to take our money in order to make new investments here; won’t be spurned for trying to attach strings; won’t have to turn on each other to figure out who’s to blame for that rejection.
That day, however, is a long way off. You might not know it from the flurry of commentary suggesting that maybe we should just make like the Australians, and stop cutting cheques to the auto industry. But if it’s not obvious from comfy perches in Toronto that we can’t yet afford to do that, it’s painfully so a few hours down the 401.
Chrysler is not quite the only game in Windsor, Ont., but as the only company that still assembles cars there, it’s not too far from that either. General Motors is long gone from the once-proud auto town. Ford has only a pair of engine plants, the larger of which is on shaky ground. Chrysler still assembles cars, employs about 5,000 people directly and is indirectly responsible for tens of thousands of other jobs in Windsor and its surrounding area, at feeder plants and supplying various services.
In a region that already has one of the lowest employment rates in Ontario, with roughly 200,000 of its 340,000 residents 15 or older holding jobs, losing Chrysler would deal an almost unimaginable blow. But that’s almost certainly what would happen if our governments stopped offering subsidies, because plenty of other jurisdictions are perfectly happy to play that game.
It is perhaps not a game we can or should continue to play forever, because those other places play it much more aggressively. To lure Volkswagen’s $1-billion (U.S.) investment in a Chattanooga plant, for instance, Tennessee coughed up a whopping $577-million – a ratio far beyond what we’ve invested on this side of the border. We can hope that other competitive advantages (a skilled work force, a competitive tax rate, proximity to an established supply chain) provide a counterbalance, but many bidding wars are going to end badly.
There are signs that we might eventually be able to turn away auto makers without causing undue suffering – mostly in the form of economic diversification, including toward more advanced manufacturing. But that will depend on developing a work force of the future, and for now we have to worry about the work force of the present.
To visit Windsor, or other corners of Ontario’s rust belt, is to hear countless horror stories about workers of a certain age – roughly 40 and up – who are simply at a loss when their traditional manufacturing jobs dry up. As many as half would appear to drop out of the work force entirely, which helps explain the low employment rate. When they do find jobs, their wages might be half of what they made before.
Mike Moffatt, an economist who has established himself as a leading voice on Southwestern Ontario’s challenges, suggests that the best approach to the auto sector might be a “controlled exit” that allows time for economic transition. Ideally, he said in an e-mail exchange on Friday, future subsidies to Chrysler would include a requirement that only workers above a certain age would be hired – a way to avoid younger generations becoming similarly reliant on unsustainable jobs.
Considering the difficulty governments have had in attaching any conditions at all, that’s improbable. But the concept, at least, speaks to the underlying imperative. Just because we shouldn’t allow future generations of workers to be held hostage by a company like Chrysler, doesn’t mean we can afford to leave those that have already suffered that fate to fend for themselves.
Editor's note: This is a corrected version of this story. An earlier version incorrectly stated Tennessee offered $577-billion to Volkswagen.