Wednesday, February 20, 2008

Canadian auto industry needs a major correction

The headlines scream, Queen's Park and Ottawa argue over who is more responsible to "support the auto industry" by reopening a Windsor Ford plant that has shut question is, why?

Yeah, yeah, I know that there is a trickle down to local economies surrounding auto manufacturing plants. If the assembly lines are humming, pay cheques are being sent out, and everything from rents and mortgages to pizza and the local bowling alley gets a piece. But, people work in retail, and other services. People work as small business owners. People work in trades. If a local mom'n'pop shop hits hard times, should the government gallop in to help them out? No, because they don't employ as many people, goes the logic. And "the auto industry" is in trouble. Really?

I look over at Cambridge and Alliston and I see auto manufacturing plants - Toyota and Honda, respectively - doing just fine, winning awards for quality, not reducing shifts, not laying off, not closing down... Clearly, the issue is not with "the industry", but with the Big 3's unionized shops, because other manufacturers in the province are doing their own thing and doing just fine, thank you very much. I think it's high time Canadian tax payers stop supporting corporations that can't carry their own weight.

Domestic products are not selling, demand for domestic product is down. Who should pay for that? Taxpayers? Why? Are taxpayers the ones designing these products that nobody wants? The Hondas and Toyotas of the world build cars people want to buy. Demand for their products keeps their plants running smoothly. Hey, did you know that Honda of Canada Manfacturing Inc.'s employees operate the largest private hockey league in the country? Hard working, hockey-loving Canadians proudly go to work for a manufacturer who provides stability, quality, inspired innovative design, and are not whining to the government for bailouts but are earning their revenues on the open market.

Nothing personal to the hard-working Canadians who do (or, did) work at the Big 3. I feel bad, really, I do. It's unfortunate that the Big 3 wooed them to work with promises they couldn't keep, and then turn to the government to make good on them. It's also unfortunate that their union representation has succeeded in ballooning Big 3 costs making it more difficult for them to be profitable. So, sure, you can get paid more dollars per hour, but ultimately you close down and lose all those hours. What's the value of the higher salary in this case? Whatever the case, it's time the management of these companies realize that their business models, their labour relations models, their strategies, their view of the way things work in this day and age are not selling. As such, perhaps they should close.

Would that spell doomsday? Not really. There's plenty of days supply on both new and used car lots to speak to demand in the short term. And those viable players would divvy up the market share, and would raise production accordingly to meet demand. And instead of a society of domestics, we'd be a society of imports. That's fine. When is the last time you bought a cell phone "made in Canada"?

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