Detroit Three auto makers added $5.8-billion to Canada’s GDP: study

The Detroit Three auto makers employed more than 24,000 Canadians last year and their output of vehicles and engines contributed $5.8-billion to the country's gross domestic product, says a new study done for Unifor, the union that represents hourly workers at the plants.

If the three companies were to cease operating in Canada, the economy would lose 150,000 jobs and government revenues would tumble by as much as $4.7-billion annually, says the study done by the Centre for Spatial Economics.

The study comes as Unifor negotiates a new contract with the companies, seeking firm commitments from the auto makers on new products for the plants.

The prospect of Fiat Chrysler Automobiles NV, Ford Motor Co. and General Motors Co. abandoning production in Canada is not on the horizon, but a GM assembly plant and Ford engine plant rank high on the endangered list and the union is worried about a Fiat Chrysler car factory.

Unifor president Jerry Dias said that if those plants close, all Detroit Three production in Canada will be at risk.

"It has to stop," Mr. Dias said. "To cross our fingers and hope for the best is not going to happen."

He described a downward spiral, with one or two assembly or engine plants closing, parts makers following suit and then auto makers saying it doesn't make sense to invest in remaining assembly or engine plants in Canada because the parts supply base has vanished or moved elsewhere.

Assembly plants operated by the Detroit Three are estimated to have purchased $4.2-billion worth of parts in Ontario last year, the study said.

That province would suffer the most significant blow if the companies were to shut down all operations. All vehicle assembly and engine plants in Canada – including those operated by Honda Motor Co. Ltd. and Toyota Motor Corp. – are located in Ontario.

Ontario would sustain a permanent reduction of 38,000 jobs and a $3.9-billion cut in revenue, the study said.

The study was commissioned in part so that governments, politicians and the public learn how important the industry is, the spinoff jobs it creates, and the tax revenues it generates, Mr. Dias said.

"It's about people understanding," he said and not continually asking "why would the government give them $1-billion."

The three companies now at the negotiating table with Mr. Dias and Unifor accounted for 57 per cent of the 2.3 million vehicles produced at Canadian assembly plants last year.

The contract talks are happening amid a profound shift in the geography of the industry.

Auto makers have spent tens of billions of dollars building new vehicle and engine factories in the southern United States and Mexico since the 2008-09 recession, while Canada has been unable to win its traditional share of investment.

Unifor is expected to announce next week which company will be the focus of its talks on a new contract. The union attempts to win an agreement with one auto maker and then have that deal serve as a template for contracts with the other two companies in a process known as pattern bargaining.

The companies maintain a public silence during the talks, but senior executives from two of them have said their Canadian operations must remain competitive and they will also need changes in government incentive programs if they are to continue manufacturing here.