The crisis afflicting much of Canada's auto parts industry deepened Wednesday with the announcement of another plant closing in Windsor, Ont., raising the stakes for the federal government as it decides whether to spend $30-million to help reopen another plant in the beleaguered city.
Nemak, a joint venture between Ford Motor Co. and Alfa SAB de CV of Mexico, will shut its Essex Aluminum Plant next year. The move eliminates 600 jobs in Windsor, already battered by the closing of a Ford casting plant, the shutdown of the Essex Engine Plant and other job cuts at that auto maker.
The closing was revealed to employees on Tuesday as chief executive officers of several auto makers and other senior players met with Industry Minister Jim Prentice in Ottawa to discuss the state of the sector in the first meeting of the Canadian Automotive Partnership Council (CAPC) since last spring.
The Nemak closing “just added more emphasis to what we've been saying right along that we have to have an automotive policy and the government has to be more aggressively pursuing every opportunity,” said CAW president Buzz Hargrove, one of the driving forces behind the creation of CAPC in 2002 and in attendance at Tuesday's meeting. The federal government must come up with $30-million to help Ford reopen its Essex Engine Plant in Windsor, which was shut late last year, Mr. Hargrove said.
Ford Motor
Magna International
Much of the discussion at the meeting focused on Canada's cost position and decline in competitiveness because of the rise in the value of the Canadian dollar.
“It's not a lost cause, but it's certainly putting a lot of pressure on everybody in Canada,” said Don Walker, CAPC chairman and co-chief executive officer of Magna International Inc. “We're going to have to be more competitive, whether that means pressure on wages and benefits, or working efficiencies, everybody in the industry has to improve.”
The meeting with Mr. Prentice came amid growing concern in the industry and among the CAW that the high dollar could put the brakes on new automotive investment in Canada and lead to the loss of tens of thousands of high-paying jobs.
Mr. Walker and other executives praised Mr. Prentice for listening, appearing to understand how important the auto industry is, and moving forward on such issues as harmonizing regulations with the United States. They also credited the Ontario government for putting in place an incentive program that led to $7-billion worth of new auto investments in the province in the past six years.
But both governments need to make sure their jurisdictions are competitive with others that are lobbying heavily to win new automotive investments, Mr. Walker said.
“Ontario is now more expensive than most of the states in the United States,” added one senior industry executive who attended the CAPC meeting.
Cheap energy was once an attraction, but it's now more expensive in that province than many other areas, the executive said. Hamilton-made steel is no longer the bargain it once was.
“It's more difficult to sell an investment today than it was in 2003,” the executive said. “We are competing against states. Especially in the southern states, there's a big cost gap.”
The Nemak closing will add to Windsor's already-high unemployment rate, which is one of the highest among major cities in Canada.
The closings and elimination of a shift at Ford's Windsor engine plant wiped out 3,800 jobs among the members of CAW local 200 in the city, said Mike Vince, president of the local.
Mr. Vince now is worried about Nemak's Windsor aluminum plant, which makes aluminum engine blocks for Ford and other customers.
The future of that plant is less bleak, he said, because only about 50 per cent of all engines in North America have aluminum engine blocks now, so there's room to increase market share.
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