Detroit has reembraced Canada

The significance of the Detroit 3’s new contracts with the Canadian union Unifor is hard to overstate.

When talks began in the summer, the future was in doubt for Ford Motor Co.’s plant in Oakville, Ontario. Feelings were still raw over General Motors’ 2019 closure of its historic Oshawa plant. And Fiat Chrysler’s minivan plant in Windsor was losing shifts as demand for minivans shrank.

Canadian auto manufacturing was in decline. Just preserving the status quo might have been seen as a win for Unifor and its leader, Jerry Dias. But instead, in one of the big surprises of this pandemic-stricken year, the three automakers committed up to CA$4.9 billion ($3.74 billion U.S.) in investments.

The Oakville factory will be converted to build electric vehicles. FCA has pledged as much as CA$1.58 billion, most of it for green-vehicle production in Windsor. And in the biggest of the stories, GM agreed to reopen Oshawa Assembly to build full-size pickups.

Dias certainly deserves his share of credit. So does the government of Canada. The government of Ontario, too, as it has shifted from a previous mindset that equated auto industry incentive support with corporate welfare.

The CA$1.8 billion Oakville deal included CA$590 million in government funding. The FCA and GM accords are contingent on expected government support.

How did it all happen? For a longer-term perspective, I talked with Ray Tanguay. The 71-year-old from Mattice, a French-speaking town in northern Ontario, joined Toyota in 1991 and later became president and chairman of its Canadian manufacturing operations. He’s still actively promoting Canadian interests, advocating for skilled-trades training as a member of a college board and he is a director of the Open Road dealership group in Vancouver.

His stature at Toyota went far beyond the company’s assembly plants in Cambridge and Woodstock. In the twilight of his career, in 2010, he was tapped by President Akio Toyoda to help craft a global vision plan for the automaker.

After retiring from Toyota in 2015, Tanguay took on a new role for the better part of three years: Canada’s auto czar. As Automotive News said at the time, his mission was to use his contacts to lure investment to what we called Canada’s “struggling auto sector.”

The work was done under the umbrella of the Canadian Automotive Partnership Council, which was created in 2002. A key for the group then and now, Tanguay says, is putting automakers, parts suppliers, labor interests and the academic world at the same table on issues such as regulatory reform, and attracting talent and investment.

The early traction got blown off course by the Great Recession and the bankruptcies of Chrysler and General Motors, Tanguay explains. Much of the industry investment afterward had a bias toward low cost, and that favored Mexico.

But the new U.S.-Mexico-Canada Agreement on trade is leveling the playing field on labor costs, Tanguay says. The Canadian auto industry is also poised to benefit from the nation’s other deals — such as the Canada-European Union Comprehensive Economic and Trade Agreement. It might help a Canadian EV plant be designated as a global supply source, in much the same way that BMW’s plant in South Carolina builds crossovers for the world.

Beyond trade, the federal government’s push for zero-emission vehicles as part of Prime Minister ’s climate agenda made support of a Ford EV plant very appealing.

There’s still a lot to be done, Tanguay says. Canada’s supply chain has to gear up to support EV production. And there will be a shortage of skilled-trades candidates to replace the newly retired.

“We have to raise the awareness that these are high-paying jobs,” he says.

Some questions remain. High among them: Who knows what the demand for EVs will be like down the road?

But for now, the latest contract round is a big win for not just the Detroit 3 and their Canadian workers, but also for Canada. It’s been a long time coming.

Tanguay’s years at Toyota helped put that wait in perspective.

“They always have a long-term view,” he says of his former employer. “Don’t think short term; think long term. That’s how we’re going to win.”

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