General Motors Co. is urging Canada’s new federal government to be more competitive in the incentives it offers the auto industry in order to spur innovation and stem the flow of jobs to the southern U.S. and Mexico.
Steve Carlisle, president of GM Canada, said he would like to see the Liberal government, elected last month, move to a system of grants similar to what Ontario offers the auto industry rather than the existing system of loans that must be repaid.
“We’ve been lobbying for this for five years,” he said in an interview Tuesday after a speech in Toronto.“We need to take a hard look at that to make our federal incentive more amenable.”
The Conservatives pledged C$1 billion ($753 million) over 10 years for the industry during the election campaign, including grants for new plants and investments in existing facilities. Canada’s auto industry is struggling as more of North America’s light-vehicle production shifts to Mexico. Canada accounted for 12.6 percent of the region’s output this year through the third quarter, its lowest on record, as Mexico’s share was 19.5 percent, according to Dennis DesRosiers, president of an automotive consulting firm in Richmond Hill, Ontario.
Carlisle said he “sensed” that the new government might be amenable to grant-style incentives. Loans are “not the friendliest kind of incentive” when other jurisdictions were offering heftier inducements, he said.
“Canada’s automotive industry is critical to the economy and automotive suppliers are an integral part of Canada’s automotive footprint and success,” Stefanie Power, a spokeswoman for the federal agency Industry Canada, said in an emailed statement. “The government has made it clear that it is interested in actively listening to all policy ideas in support of its goal to help Canadian businesses grow, innovate and export so they can create jobs and wealth.”
The new federal government already is being prodded by the province of Quebec to offer assistance to financially struggling Bombardier Inc. The province last month agreed to a $1 billion investment in the planemaker’s CSeries jetliner.
Among the lost opportunities for Canada’s auto industry was Toyota Motor Corp.’s decision earlier this year to begin producing its Corolla in Mexico in 2019. The car is currently built at the company’s Cambridge, Ontario, plant.
Part of the decline in Canadian production this year was the result of Fiat Chrysler Automobiles NV’s shutdown of its Windsor, Ontario, plant this spring for retooling, reducing production at the factory by about 120,000 vehicles, DesRosiers said in an interview.
The broader structural issues about the future of Canadian auto assembly remain, he said.
GM recently extended the life of the consolidated production line at its Oshawa, Ontario, assembly plant to 2017. The future of that factory, as well as the company’s plant in Ingersoll, Ontario, remains in question, with a high risk that those jobs will move elsewhere at some point, DesRosiers said.
“Virtually every Canadian plant is up for renewal by the end of the decade and every single Canadian plant is vulnerable when their product mandate expires,” he said.
Carlisle said GM is evaluating what will happen in Oshawa after 2017 with both the federal and provincial governments and with Unifor, the union representing its workers.
“That’s on a timeline that will start to kick up later next year,” he said.