I have only one question for General Motors of Canada following its announcement that it will hire 700 engineers in this country to help develop the car of the future: What took you so long?
GM has been operating in Canada for almost a century, one during which its U.S. parent rolled out dozens of innovative models, from the Oldsmobile Toronado (the first U.S. car with front-wheel drive) to the Chevy Bolt (its upcoming entry in the electric-vehicle sweepstakes).
Despite the billions of dollars that taxpayers here have pumped into GM Canada, however, little if any of it has gone toward encouraging research and development in this country. That is mainly the fault of governments, which have always emphasized assembly-plant jobs over R&D and failed to extract hard commitments from GM to employ more engineers here.
Even during the mother of all bailouts in 2009, Ottawa and Ontario were much more worried about securing a promise from GM to meet a hard target for assembly – 16 per cent of its North American manufacturing capacity – than they were about how much R&D GM performed here.
It's good that GM Canada is finally responding to criticism that this country has been chronically shortchanged when it comes to the parent company's global distribution of R&D activities, which provide the most highly skilled and best-paying jobs among non-management employees. The new hires will almost triple the number of engineers GM employs in Canada.
We still have to wait for the other shoe to drop. The fate of GM Canada's Oshawa, Ont., manufacturing operations remains in limbo as the company prepares to end or transfer production of the models assembled there. By putting out good news now, GM Canada may be seeking to make any bad news concerning Oshawa easier to swallow.
Still, while it would be nice to have both, R&D jobs are clearly a better deal for Canada. Despite the multiplier effect of assembly jobs in upstream parts makers and steel producers, and the good salaries they provide for those without advanced degrees, they are a threatened species as automation renders most manufacturing jobs redundant.
A new study by the Brookfield Institute for Innovation + Entrepreneurship at Ryerson University underscores this reality. Applying methodologies developed by Oxford University professors and global consulting firm McKinsey & Co. to the Canadian labour market, the study concludes that auto-assembly jobs face a 90-per-cent probability of automation within the next 10 to 20 years.
Jobs in software engineering face only an 8.6-per-cent probability of being automated in that period. On average, such jobs also pay almost twice as much as those on an auto-assembly line.
The car industry is the biggest adopter of automation, accounting for 55 per cent of industrial robot sales in North America, according to the International Federation of Robotics. U.S. auto makers are second only to their Japanese counterparts in "robot density" with 1,141 robots for every 10,000 assembly workers in 2015 – more than 10 times the economy-wide average.
So even if GM's Oshawa operations survive, they will employ far fewer people than the 2,500 assembly-line workers who now toil at the plant. Governments and unions alike need to prepare for this robot revolution by helping assembly-line workers upgrade their skills and transition to different jobs. Governments especially need to stop throwing money around to save jobs that can't, frankly, be saved.
"Everything from individual tasks to entire industries is being disrupted, so it's foolish to try to lock in place select elements of the existing order," Race Against the Machine authors Andrew McAfee and Erik Brynjolfsson write in Foreign Affairs magazine, adding: "Attempts to do so – for example, by making it difficult for companies to hire anyone except full-time salaried employees – will only result in a protected community of jobholders that shrinks over time and an ever-growing group excluded from participation" in the job market.
While policy-maker angst over the robot revolution is a constant everywhere, automation threatens to generate far more dislocation in emerging economies that have counted on luring manufacturing jobs from the West to lift millions of their citizens out of poverty. "Due to technological advancement, low-wage regions which have traditionally attracted manufacturing firms will not have the same possibility of achieving rapid growth by shifting workers from farms to higher-paying factory jobs – therefore they would need to find a different path to prosperity," concludes a recent study by researchers at Oxford University and Citibank.
As cars become smartphones on wheels, Canadian governments need, more than ever, to ensure this country captures its share of auto-sector R&D. GM's announcement is a good start.