Border blockade damaged Canada’s reputation, business leaders say

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Police in Windsor, Ont., cleared protesters at the Ambassador Bridge on Sunday, allowing the bridge to re-open and clearing the way for hundreds of millions of dollars in daily cross-border trade to resume. But industry groups are concerned the nearly week-long blockade has damaged Canada’s reputation with international investors, especially as a separate demonstration in Coutts, Alta., continues to disrupt the flow of goods to and from the United States.

The protest at the crucial border crossing that connects Windsor and Detroit has severely affected Canada-U.S. trade, forcing auto makers on both sides of the border to temporarily stop production and send workers home in some cases. Food producers, meanwhile, face the prospect of perishable items spoiling as shipments are not able to be delivered.

Windsor Police arrest at least 25 people as they clear protesters blocking border crossing at Ambassador Bridge

Multiple border crossings remain closed as convoy protests against COVID-19 measures continue

The blockade at Windsor has already cost the auto sector about $1-billion, estimates Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association. What’s potentially more worrying is that the demonstration and the response from police and government to resolve it could jeopardize future investment in the country’s auto sector.

“This is absolutely the worst time in the last 50 years to be pointing out to international investors that Canada’s access to the U.S. market is not guaranteed,” Mr. Volpe said.

Automakers are investing heavily in production of electric vehicles and several large companies are looking to establish battery manufacturing plants in North America. The uncertainty and disruption caused by the border blockades could give investors pause when considering new business in Canada, Mr. Volpe said. “There’s a chance that we’re further down the priority list today,” he said.

The APMA was one of the parties that brought a motion for an injunction last week to end the blockade in Windsor, and Mr. Volpe criticized efforts to deal with the protest. “I hope that law enforcement and governments are alive to the actual threats here, and don’t spend days watching and waiting and underestimating the next time somebody threatens to disrupt what we’re doing,” he said.

In the near term, auto makers that had to shorten hours for workers should be able to resume regular shifts within days of the bridge reopening at full capacity, said Shane Wark, assistant to the national president at Unifor, the union that represents some 38,000 Canadians in the automotive sector. “Because of the just-in-time nature of the supply chain, when [traffic] stopped, it shut the plants down fairly quickly,” he said. “The reverse is likely going to be true.”

Last week, Stellantis NV cut short shifts at its Canadian and U.S. plants owing to a parts shortage caused by the closing of the Ambassador Bridge. “We will not comment on projected losses, but will look to make up that production in the coming months,” spokesperson Lou Ann Gosselin said in an e-mail. “We are working with our carriers to get parts into the plants as quickly as possible to mitigate any further disruptions. We expect to resume operations Monday morning as scheduled.”

Windsor Mayor Drew Dilkens said in a statement he will “defer to police and border agencies” to determine when traffic can cross the bridge again. U.S. Homeland Security adviser Liz Sherwood-Randall, meanwhile, said Canadian authorities intended to reopen the bridge on Sunday.

Demonstrators protesting against vaccine mandates and other COVID-19-related health measures set up at the Canadian entrance to the Ambassador Bridge on Feb. 7 and remained for days, even after the provincial government declared a state of emergency and an Ontario judge granted an injunction against the blockade.

“It’s bad for our reputation,” said Dennis Darby, CEO of Canadian Manufacturers & Exporters, especially when the U.S. government is focused on strengthening Buy American provisions. To restore confidence, he said, Canadian governments need to ensure there are regulations and systems in place to keep critical trade infrastructure open.

The protest came at a time when supply chains have already been disrupted by the pandemic, and with inflation running hot. In a recent report, Bank of Montreal chief economist Douglas Porter called the closing of the Ambassador Bridge “another blow to fragile supply chains” and said it “could at least aggravate some price pressures.”

Demonstrations continue at the border crossing between Coutts and Montana, which has been particularly damaging to the meat industry. The majority of the $4.7-billion in beef and pork Canada exported to the U.S. in 2021 went through Coutts, said Chris White, CEO of the Canadian Meat Council.

Packers and processors have been unable to ship product in some cases, while struggling to find storage capacity and refrigerated containers. “From a day-to-day basis, it’s just very, very difficult to plan,” Mr. White said.

On Friday, more than 160 industry groups, chambers of commerce and trade boards signed an open letter urging officials to bring an end to blockades at the border and voicing concern that Canada could suffer damage to its reputation. “We are already hearing calls to move investment, contracts, and production from Canada because of our inability to guarantee timely delivery to international customers,” the letter stated.

“There has got to be a systematic, holistic approach to making sure this doesn’t happen,” Mr. White said, whose organization was a signatory. “The frustration for industry is we worked so hard during Covid to make sure Canadians had a decent supply of product, and this is yet another challenge that nobody needs.”

Food producers have been hit hard by the Ambassador Bridge closing, too, with difficulties shipping products and some companies cutting hours or cancelling shifts entirely. Denise Allen, president of the Food Producers of Canada, said it is difficult to predict how quickly the sector could bounce back once the Windsor-Detroit crossing reopens, given other supply chain challenges brought on by the pandemic. “We haven’t had a sense of normal in a number of years,” she said.

The border protests, and the potential for reputational consequences, just add more uncertainty. “When investors or buyers of our goods start to look at Canada as somewhat questionable in terms of our ability to maintain production and the flow of goods, we become very concerned with the long-term prospects for investment,” Ms. Allen said.

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