The potential Trump effect on Guelph and the Canadian auto industry

Bt Gerry Barker

January 23, 2017

The new U.S. President Donald Trump, promised his supporters in Pennsylvania, Ohio, Michigan and Wisconsin that he would bring back the jobs that have left the country.

Of his dark threats to a number of established issues, not the least of which was trade, border tariffs, make America first and great again, ad nauseum.

He made promises he will not be able to keep because he insulted the very people he will need to carry out his agenda, the members of the U.S. Congress. They, for the most parti sat in stoney silence as he threatened to get rid of the politicians that looked after themselves but turned their backs on the people.

“Friday,”  he roared, “mark this the first day of returning the power back to the people.”

He went on out to say that America will come first, including renegotiating free trade deals with countries around the world including Canada. The North American Free Trade Agreement (NAFTA) in 30 years, has resulted in the world’s largest trading partnership. America is our biggest customer and we are their biggest customer.

So why is Trump threatening NAFTA? It’s because he is placating the voters who elected him in the so-called rustbelt states, Pennsylvania, Ohio, Michigan and Wisconsin. These four states delivered his presidency, sufficient votes in the peculiar and antiquated Electoral College system used to elect the president. Even though his opponent, Hillary Clinton, won more that 2.8 million more popular votes across the nation than Trump.

While it’s interesting that Trump continues to rail against the Mexican border, still promising to build a wall that claims Mexico will pay for.

I can not recall in 18 months of his divisive broadsides of a very personal nature against not only his opponent but to members of his own party and more particularly minority groups and women.

It will be only a matter of time before Canada and more particularly Guelph, could be seriously affected if the Trump administration follows through and erects trade barriers.

In Ontario, there are more that 32,000 workers employed in the automotive sector of the province’s economy. In recent years the number of workers has declined as major automakers restructured due to major changes in technology.

The largest private employer in Guelph is Linamar that operates internationally but has 19 plants in Guelph, turning out transmissions, drive trains and a variety of parts most on which are shipped to U.S. assembly plans.

In 2008, Canada, both Federal and Provincial governments, supported President Obama’s plans to save the U.S/Canada auto industry. Ontario, for its part, invested $10 billion along with Canada and the U.S. This tripartite action resulted in General Motors and Chrysler, entering chapter 11 of the bankruptcy act, and the three governments funded the restructuring of both companies. Ford declined any financial aid.

Today, the NAFTA North American auto industry is healthy and profitable as are the Canadian auto parts manufacturers.

It may come of some surprise that Trump keeps talking about the jobs going to Mexico at the expense of U.S. workers, but doesn’t mention Canada. Ontario has a larger piece of the assembled-car business sold in the U.S. than NAFTA member Mexico, 27 per cent compared to 18 per cent,

I think this portends a threat to our Ontario auto manufacturing. Granted, it’s early in the game but Trump is determined to return jobs to his country by fair means or foul.

Many of those manufacturing jobs in the auto industry plants in the rustbelt are gone forever, not because of the free trade agreement but due to automation and the use of robots replacing people.

If Trump succeeds in placing tariffs on our borders, it will price our automotive industry out of business and add fodder to a full-blown trade war if he scraps NAFTA.

His judgment illustrates his glaring lack of understanding how his country and the role it plays in the global economy. Having never been elected to any level of government or served his country in any way, including military service, impairs his judgment. He was eligible for the draft during the Viet Nam war but received deferments.

So if Trump initiates his plan to install a 35 per cent tariff on all cars assembled outside the United States and landed at its borders, there will be a major trade war that could lead to a depression.

The last time that was tried was 1931 when President Herbert Hoover attempted to stop imports into the U.S. using excessive tariffs. The result was the Great Depression from which America did not recover until World War II.

Here is just one example how a 35 per cent tariff at the border for assembled vehicles could affect our Guelph economy.

The new Chrysler Pacifica SUV is manufactured in Windsor; this is the only plant to make these cars, most of which are shipped, tariff-free, across the border to supply U.S. dealers.

The Trump “America First” agenda would cripple Chrysler, make the Pacifica too expensive to sell in the U.S. and destroy the U.S./Canada Auto Pact that is part of NAFTA.

This isn’t going to happen right away but the threat of renegotiating NAFTA, (to which our Prime Minister has already agreed to) could have a devestating impact on our economy.

 

 

 

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10 Comments

Filed under Between the Lines

10 responses to “The potential Trump effect on Guelph and the Canadian auto industry

  1. Joe Black

    Politician lie……

  2. Barry

    What a treat to see an article by you that is not slamming City Council, the Mayor, and Guelph’s City employees. This article is well written and makes many good points that Guelph needs to be concerned about that is far above what our Local Government has control over. Try sending this to our MP and MPP for a change.

    • Barry: Thanks for your comment on the Trump/Guelph piece. As a taxpayer, I am more concerned about more than $50 million of our money being wasted by the previous administration. (Urbacon settlement $23 million and the Community Energy Initiative, $26.2 million). Both those losses were admitted by our former CAO, Ann Pappert, who has left us for a higher calling. And yet the matter of excessive spending has not deterred the present administration that lurches deeper into debt driving up taxes and costs. The local newspaper covers that laundered stuff emanating from the city communications department and rarely digs into the story to get both sides. Guelphspeaks will continue keeping up the pressure and digging into the background of these self-serving press releases. There are 50 million and counting reasons for doing so.

    • Barry: Thanks for the comment. My blog, http://www.guelphspeaks.ca will continue to comment on the administration of the city. The previous administration lost $50 million on just two capital projects: Urbacon and the Community Energy Initiative. That’s 50 million reasons for questioning and exposing the waste and mismanagement. Both key people involved in these two debacles are gone. But little has changed to reform and recover from these devastating losses. Albert Einstein was once asked for a definition of insanity. He replied: “It is repeating the same mistakes over and over.”

  3. Interesting to note our Wynner premier has recenty taken a slice off Kevin O’Leary in the media on his facts regarding this very issue facing Canada, and in particular Ontario and Guelph. I am not sure of the numbers and stats but Gerry has framed the issue with grandeur of what we face to lose. There is one comparison O’Leary has made that to me is picture perfect: Trudeau standing up to Trump is like Bambi facing Godzilla. Heaven help us, we’re going to need it.

  4. geo

    Wynne publicly condemning Kevin O’leary is a Godsend to his team working in Ontario. I’d say the province is his now.

  5. Guido

    Barry suffer from News Poverty , you knock Gerry for trying to hold the city accountable. If his critique is wrong the city or you should correct him. The local media simply copy city releases.

    • Barry

      Both you and Gerry missed my point and that was it was nice and refreshing seeing Gerry write a different type of article then what we are used to reading and even his targets are different for a change. No where did I imply he should stop doing what he likes to do best but sometimes a new topic such as the Trump issue is refreshing to those that read his articles. No comments so far have agreed with my suggestion that he proceed in contacting our MP and MPP for their opinions. I doubt our Council and Mayor would have little clout with their concerns.

  6. Guido

    I agree, we need to get our elected officials to be kept accountable at all levels of govt.

  7. guelphspeaks reader

    600 jobs gone from Ingersoll to Mexico today. What’s the trickle down on that going to be. GM says it had nothing to do with Trump, who is too busy picking fights over his wall, the size of his inauguration audience, and taking away women’s rights to start implementing his protectionist agenda yet. O’Leary couldn’t stop it any more than Justin. The Trump disaster will be much farther along by the time of the next fed vote. O’Leary will go the way of Sun News.

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