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Canada needs an automotive industry policy that encourages the creation of a Canadian-owned auto maker, ends free-trade discussions with Japan, South Korea and the European Union and slaps tariffs on companies that don't manufacture vehicles here.
Those are some of the recommendations made by the Canadian Auto Workers in a policy paper called Re-Thinking Canada's Auto Industry released prior to a series of town hall meetings in key auto cities across Ontario as the union gears up for negotiations on a new contract with the Canadian units of the Detroit Three auto makers.
The paper comes as Chrysler Group LLC, Ford Motor Co., (F-N) General Motors Co. (GM-N) and offshore auto makers enjoy a strengthening recovery from the 2008-2009 crisis that put two of the Detroit companies in bankruptcy protection and led to tens of thousands of jobs cuts in North America.
"It would be a huge mistake to be lackadaisical and say, 'okay, that was just a crisis, now we're back to normal circumstances,' " said CAW economist Jim Stanford.
The paper was released Monday and town hall meetings begin in Windsor on Tuesday. Official negotiations with the Detroit Three will kick off in July.
The paper calls on the federal and Ontario governments to intervene, with one of the key recommendations aimed at securing commitments by companies to maintain manufacturing footprints in Canada. Such commitments would win companies taxpayer support for new investments, participation in a national vehicle procurement program and access to trade-in incentives for replacement of old vehicles.
Auto makers that sell vehicles here but don't make such commitments would face tariffs or limits on the number of vehicles they would be allowed to ship here and other penalties.
"There is no excuse for inaction on the part of our governments in the struggle to protect Canada's share of this industry, the decent, middle-class jobs which it provides and the enormous spin-off benefits it generates through our communities and our entire national economy," the policy paper declares.
The paper also addresses hourly labour costs at the Canadian units of the Detroit Three, which have already been identified by senior executives of those companies as being among the highest in the world and out of step with both what they pay their U.S. employees and how they pay them.
Those issues will be critical in the talks as the CAW seeks to regain some of the items they gave up during the crisis and win new investments at assembly and components plants operated by Chrysler, Ford and GM.
Canadian hourly labour costs, including wages, health care provisions, pension contributions and other benefits amount to about $60 an hour on average at the three companies, the paper says.
The paper says that's about $3 to $6 higher than the Detroit Three's U.S. operations based on a Canadian dollar trading at par to the U.S. dollar.
The Center for Automotive Research, an industry think-tank in Ann Arbor, Mich., puts the all-in hourly labour costs at U.S. plants at $58 for Ford, $56 for GM and $52 for Chrysler.
But the paper argues that based on purchasing power parity, the dollar is actually worth about 81 cents to Canadians, which means that a Canadian dollar in Canada buys the same amount of goods and services as 81 cents US does in the United States.
That's based in part on higher prices for a basket of goods and services in Canada, the report says, including homes, a litre of gasoline, hard cover best sellers and motor vehicles, even those made in Canada.
Auto makers "may argue that the exchange rate isn't their doing and thus balk at paying more for Canadian workers ... than in other countries. Needless to say, the fact that they charge Canadians more for their own products (thus contributing directly to higher average level of prices in Canada) undermines the credibility of their complaint," the paper says.