The federal and Ontario governments should establish an automotive investment board headed by an experienced auto executive as a means of winning new vehicle assembly plants, which have gone almost entirely to Mexico and the southern U.S. states in recent years.
That recommendation was made to federal Industry Minister James Moore and Ontario Economic Development Minister Brad Duguid at a meeting Monday of the Canadian Automotive Partnership Council (CAPC), an industry committee established a decade ago to advise the governments on auto policy. "The Canada-Ontario Automotive Investment Board will advance the position of Canada and Ontario as the location of choice for automotive manufacturing investment," said the report.
The proposal comes amid major concerns among auto parts suppliers, other industry officials and Unifor, which represents workers at Detroit Three plants in Canada, about how the industry here – and the tens of thousands of high-paying jobs it supports – is shrinking while it expands in Mexico and several U.S. states.
The report compared the lack of new investment in the sector to the 2008-09 crisis, during which Ottawa and Ontario contributed about $14-billion to the bailouts of Chrysler LLC and General Motors Co.
"Canada and Ontario have demonstrated an ability to work together when the stakes are high and the urgency is real (2009 industry rescue)," the report said. "Today … the stakes are high and the urgency is real."
The board's mandate would include promoting Canada and Ontario to prospective investors, providing a single point of contact to auto companies and executive a visible automotive investment strategy.
The report pointed to five new assembly plants in Mexico that have been announced in the past 24 months that will generate almost $6-billion worth of investment and more than 10,000 new jobs. Two projects worth $1-billion that will create 3,500 new jobs have been announced in the United States.
Canada's tally is zero.
"If Canada has 15 per cent of North American [vehicle assembly] capacity, it should attract 15 per cent of capital spending, otherwise the [manufacturing] footprint becomes unsustainable. Right now, we have less than 5 per cent," the report said.
Don Walker, who is chief executive of Magna International Inc., and chairman of CAPC, said there was not complete agreement among participants at Monday's meeting that an investment board or a dedicated automotive office such as the one established by Michigan recently is necessary.
"The concept that we need to attract investment; everybody agrees with that," Mr. Walker said at the suburban Toronto hotel where the meeting was held. "Everybody's agreed we've got to put our heads together and figure this out in a relatively short time period."
Michigan, which has knocked Ontario out of first place as the largest manufacturer of vehicles by state or province in North America, has created the Michigan Automotive Office, staffed by an industry leader who reports directly to Governor Rick Snyder.
Mr. Moore said issues such as what the mandate of an investment would be, who would pay for it and whether it would help Canada compete against Mexico and other jurisdictions still need to be studied.
One recent example, he noted is the decision by Ford Motor Co. not to invest in its Windsor, Ont., operations.
"If this body existed or this person existed in Canada, would we have secured that investment? I think the answer is no."
Mexico is winning billions of dollars of new investment in part because it's willing to subsidize individual projects with hundreds of millions of dollars that amount in some cases to as much as 50 per cent of a company's investment, he said.
"It's a scale of investment that would be utterly unaffordable for Canada," he said.
Jerry Dias, who sits on CAPC as the president of Unifor, said governments here should be prepared to offer 50 per cent of a project's cost.
The $1-billion spent in Ontario in the past decade generated $2.4-billion in gross domestic product, he said, so the payback for governments makes sense.
Nonetheless, he said he was encouraged by Monday's meeting.
"Everybody understands we've got to be a hell of a lot more aggressive," he said.