Flavio Volpe, President of the Automotive Parts Manufacturers’ Association, had sobering words when talking about what would happen to the Canadian auto parts manufacturing business if U.S. President Joe Biden’s tax bill goes through after failing the first time.
“If we lose that fight and American-made vehicles are $12,500 cheaper than Canadian-made vehicles, it’s very easy to understand how binary the future is here,” said Volpe during the 2022 CADA Summit on February 16. “There is no future for Canadian manufacturing in that space and we will fight that threat.”
When asked by Canadian auto dealer Publisher Niel Hiscox in a panel discussion about electrification if the bullet Canada dodged when Biden’s bill failed to go through in December is still there, Volpe replied: “It is.”
He noted the three-year deal that Canada, the U.S and Mexico jointly agreed to in 2020 could be in trouble.
“We thought we struck a good balance, but the Americans have changed government and we thought we were going to have a renewed friendship, and what we’ve realized is they are becoming permanently protectionists,” he said. “It’s a poorly-articulated policy that shoots their partner in Canada. You can’t compete with China if you shoot Canadian operations.”
Unifor President Jerry Dias concurred with Volpe that the situation is cause for concern. “There’s no question this is the fight of our lives,” he said.
Dias said Canada was in the fight of its life during the Donald Trump era, because of all his inconsistencies. They had hoped it was all behind them with the election of Biden. “We expect we finally have an adult in the White House and here we are in the fight of our lives,” he said.
Dias adds that the situation between the two countries goes back 20 years when Canada was prospering in terms of building 3.1 million vehicles, which ranked it fourth in the world. But things changed significantly with the loss of eight assembly plants and about 35,000 direct auto jobs. He said Canada went into the bargaining of the existing North American Free Trade Agreement as an opportunity to fix that.
Dias said when the U.S. announced last year it planned to give a $12,500 discount on electric vehicles built in America, the Canadian and provincial governments indicated in a call with Stellantis they planned to match the U.S. dollar for dollar, knowing the decisions have effects in five or so years.
“Canada, I believe, understands what’s at risk and they are in it in a meaningful way and it’s music to my ears,” said Dias. “Am I concerned about a Buy American strategy? The answer is yes.”
He adds that “The other part of it is it doesn’t make a heck of a lot of economic sense, because what in essence (the U.S. is doing) is penalizing American auto parts workers, because we know the overwhelming majority of parts that go into Canadian assembled vehicles come from the U.S. So by now penalizing Canadian-built vehicles, they are penalizing U.S. auto workers.”
“The argument is much more complex, so I would expect there will be a meeting of the minds that Canada will likely be exempt (from whatever incentives are put through). But we’re certainly ready if in fact Biden finds a path in getting there. What we’re dealing with right now is politics, not an economic, common-sense argument.”
David Adams, President of the Global Automakers of Canada, said even the threat of Biden’s bill going forward is “problematic” for the Canadian auto industry, because it could potentially scare foreign investors.
