Subcommittee on the Automotive Industry in Canada Committee on March 9th, 2009

[Robert Vincent, Bloc, Shefford, QC]

Regarding the hourly salary, someone mentioned earlier that workers here earn $30 an hour. How much do you pay your employees?

[David Worts]

I think the hourly rate at a big three plant in Canada would be comparable to the hourly rate at one of our member's plants in Canada, yes.

[Robert Vincent, Bloc, Shefford, QC]

Are you considering any layoffs or pay cuts to protect production at your plants here in Canada?

[David Worts]

At this point I have not heard of companies considering layoffs. They're going to look at any number of measures that can help them adjust to the current market, including slowing down the line rate and reducing overtime. There are situations when extended periods of time off have been taken over the Christmas period to adjust inventories to market conditions. They're trying very hard not to. They generally have a policy of not laying off full-time employees because they realize that in the longer term these are serious assets to the company. Having trained many of these individuals in the Toyota or other lean production system, they're assets to the company and they're loath to lay them off.

[Robert Vincent, Bloc, Shefford, QC]

If I understand correctly, labour costs are comparable. As the union official stated earlier, the cost is about $1,200 per vehicle. Are your costs similar?

[David Worts]

The hourly rate might be very similar. Where they differ is probably on the benefits side of the package.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Adams, I've read your Association's “Public Policy Positions“. In the section on investment policy, it is stated that your Association believes in a “collaborative industry/academia/government sectoral “cluster” approach to spur innovation and commercialization.

Could you tell me more about this “cluster“ approach?

[David Adams]

I think that really is modelled on the Canadian Automotive Partnership Council model, which involved the participation of academia, workers, and parts manufacturers. I think where CAPC might have been lacking a little bit was in representation from my membership more broadly. It's one thing to have the manufacturers present, but potentially, at any given time, any company could possibly become a manufacturer in Canada. So I think our voice might not have been heard as much at that table. I think, in theory, the idea was to get the government, academia, and industry--all facets of industry--together to try to formulate the types of things Mr. Nantais referred to earlier. How do we deal with the issue of standards disharmony? How do we deal with the environmental issues we're looking at? How do we deal with things like human resources, for instance? So all those things were looked at through that lens of having all the parties that could possibly make a difference around the table.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Adams.

Mr. Wallace, you have the floor.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair. I'm going to be very quick. I need relatively quick answers.

A couple of you will be happy. I have a new domestically made car in my driveway as of Saturday, and I have another one at a Toyota dealership, and I have to decide whether a $3,000 repair is worth it or whether I scrap it, since it's a 1998. So I like the scrappage program, by the way.

On that, I'm assuming you're talking...that's not in lieu of other things; that's in addition to all the other “asks” we have. Is that correct? Could I have a yes or no answer to it?

[David Adams]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

That's a yes. That's in addition. So that would be more government money to support that program, or is that a shared program between us and the car dealers?

[Mark Nantais]

That would be government money, but let's be clear here. You're also going to get some revenue in return, by virtue of those new sales. So we need to net it out.

[Mike Wallace, Conservative, Burlington, ON]

Okay. Thank you.

On the automotive innovative program, Mark, which you mentioned a number of times, I think it has been mentioned that it has made a difference thus far. You said something about extending it. Do you have a sense from your organization of how long and how much money would be required?

[Mark Nantais]

Well, in some ways, it's almost as if it should be there in perpetuity. As long as there's an interest in investing in Canada, as long as we have the right business conditions in Canada, it would have usefulness. So it's like one of these things where, when you look at the ledger in terms of the investment decision, one jurisdiction versus another—and we've seen this in the southern United States, where they have put literally a billion dollars cash on the table to attract new investment—the automotive investment fund provides a positive for Canada—

[Mike Wallace, Conservative, Burlington, ON]

Okay, I appreciate that. You want a long-term vision on that.

Last week we were criticized in the House—inaccurately, in my view. We put $4 billion on the table for emergency funding before Christmas, and no domestic automaker took advantage of that. Is that not correct, Mark?

[Mark Nantais]

Nobody has drawn down on that money.

[Mike Wallace, Conservative, Burlington, ON]

Thank you very much. In the House, an individual got up and asked why we couldn't get the money out when we put $4 billion up. But no one came and asked for it.

My next question is my final question really, and what I've been thinking about is the $12 billion secured credit facility. Mr. Romano may not be happy with this comment. My thinking is that it's good for companies to be able to sell leases or to bundle leases and be able to provide financial tools to potential buyers. That's great. It probably should be available to everyone, but should it be prorated for those who actually manufacture in this country?

[Don Romano]

I don't understand why that would be a qualification for getting—

[Mike Wallace, Conservative, Burlington, ON]

Well, you're using taxpayers' money...I don't mean all of it. My thinking is that we have companies that are producing in Canada, and we have companies that aren't but are also selling cars, so we have to help them all. But do we help those that are actually manufacturing cars in this country a little more, with access to that facility?

[Don Romano]

Again, as I mentioned earlier, I think when you have 164 dealers across the nation, family operations that employ more than 6,000 people, we have to consider their needs as well. Right now it's not just the manufacturing base, it's the entire industry, including the parts manufacturers. It's the truck-drivers; it's everybody who's involved in this industry. They all would benefit from a good consumer stimulus program that could be provided through that fund.

[Mike Wallace, Conservative, Burlington, ON]

Thank you for those answers.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Wallace and Mr. Romano.

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Nantais, the Korea trade deal has come up a couple of times. What type of impact could that have on the sector right now, in your opinion? I ask the question to any other panellist as well.

[Mark Nantais]

Our view is that what is being negotiated right now with the Canada-Korea free trade agreement is not the right deal for Canada, whether it's the auto industry or perhaps elsewhere. In our case, what is currently being negotiated could bring as much as, or over, $1,300 on the hood of every vehicle Korea sends to this country, on top of being the wide-open market.

You know, we need reciprocal access to that country, and they've been using, very successfully and systematically, non-tariff barriers to trade, which prevent not just vehicles from Canada, not just vehicles from CVMA member companies, but vehicles made by any manufacturer from virtually any country around the world. You simply cannot get into that market. The United States has attempted other means as well—I think this has come up in previous discussions—of trying to get a compromise, if you will, or cooperation from the Korean government by using two memoranda of understanding back in 1995 or 1998 or thereabouts. They signed those agreements. And guess what? No progress.

The KORUS agreement that the U.S. has on the table right now is also open in terms of the auto chapter, to be renegotiated based on the current administration's view of that chapter.

So we just think it's the absolute wrong time and the wrong deal for Canada. It may well be put in the context of a free trade agreement, but it's certainly not a fair free trade agreement.