OTTAWA—Conservative Leader Stephen Harper’s $1-billion pledge for the auto sector is a crucial promise, experts say, because the industry will eventually be exposed to foreign competition after Canada joined a huge Pacific Rim trade pact.
Harper announced that a re-elected Conservative government would provide a $1-billion package over a decade by extending the government’s Automotive Innovation Fund.
The Conservatives agreed to phase out Canada’s 6.1 per cent tariff on imported vehicles over five years this week when it signed the Trans-Pacific Partnership with 11 other countries.
The move has attracted mixed reviews in Canada—some argue it could help the industry while critics warn it would kill thousands of auto-sector jobs.
Auto industry consultant Dennis DesRosiers said the investment proposed by the Tories wouldn’t be considered huge in the always-costly car business—but it would help keep the Canadian industry afloat.
“The name of auto policy everywhere in the world comes down to three words: cut a cheque,” DesRosiers said when asked about the Tory pledge, which would support the “bricks and mortar” costs of assembly plants.
“This is a game where a billion dollars can be blown out the door on one project. This is $100 million per year.
“But without it we’re dead—with it we’re at least in the game.”
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said Harper’s election pledge is a significant amount of money that sends a positive signal the Tories are committed to keeping the auto industry in Canada.
He noted that the extension of the innovation fund would have the added improvement of providing grants instead of loans, as it did in the past.
Volpe also credited NDP Leader Tom Mulcair for promising to help the auto sector, giving the industry the support of major political parties.
“We’ve been looking for that champion for a long time,” said Volpe, whose association represents 250 auto-parts companies—a dozen of which make up half of the sector’s employment.
However, he added that while the TPP offers opportunities for large companies, small and medium outfits worry about increased competition from foreign firms.
The autoworkers’ union Unifor, which has strongly opposed the TPP, said Harper’s big-ticket promise essentially acknowledges the freshly signed trade pact will hurt the sector.
Unifor has warned the Canadian auto industry could shed as many as 20,000 jobs as a result of the tariff reductions in the trade deal.
“The announcement today is all about politics,” Unifor president Jerry Dias said in an interview.
“The problem with this fund is that it really is too little, too late. It’s a step in the right direction—it’s money, it’s helpful.
“But if you understand the auto industry you’ll know that $100 million per year for 10 years really is not very much.”