Thank you very much, Mr. Chairman and members of the committee, for the opportunity to be here today to present the position of our union.
I'm here on behalf of about 150,000 people who work directly in the industry, as well as tens of thousands of others who work in related industries and rely on a successful production system in Canada's most important industry for their jobs.
First let me say, considering the Clean Air Act, Bill C-30, I believe the committee's responsibility, and the government's, as my colleagues have said, is to strengthen our country's commitment to environmental sustainability. Our union supported the Kyoto accord when it was brought out. We still support the principle of international obligations, and we believe it is the only road to take if you're going to deal with global warming or reduce greenhouse gases. It's a lot longer and tougher than we had anticipated, but we still believe that it is the only road to take collectively, as a world of nations.
I just read about three weeks ago in Time magazine that in Japan, including the city of Kyoto, in which the accord was adopted, carbon has increased by 8%, in spite of some of the major efforts they've made. They still have a problem, and it is a much larger problem than we have.
I do want to say to the committee members that this is a human problem in terms of what the impact of the environment is on the people of Canada and our neighbours. It's also a human problem in terms of how it impacts on the people who work in the industry.
The major manufacturers who invest in this industry are General Motors, Ford, and Chrysler. They provide 80% of Canada's investment in the auto industry, year after year. They provide 80% of the jobs. They buy almost 85% of the automotive parts that are made by traditional manufacturers, mainly in the provinces of Ontario and Quebec, and by some minor operations in other provinces. They're all struggling. Each of them will lose big time in their North American operations in 2006 and 2007. At the end of 2006, Ford announced a $12.7 billion loss on top of losses from the year before, and they're saying they can't turn the corner until 2009. Whatever we do, it can't be so onerous that it takes already crippled companies that are providing jobs for people and undermines their ability to survive.
I want to reinforce what my colleague from the CVMA said, which is that our industry is responsible for about 12% of greenhouse gases but that if we look at the vehicles produced in the last two or three years, you're talking about 1%. If we could get rid of all the vehicles that were built more than five years ago, the auto industry would have no need to even be talking to us about our commitment and what we've done. We are still willing to work with the government and work with others to try to improve our record.
In our view, the government should put in place standards that will drive environmental improvements in the vehicle industry. The standards need to be achievable, effective, and constructed in a manner that compels improvements at the same time they strengthen Canada's automotive industry. Other countries around the world are adopting tougher standards, but there's a lesson in it for us. In doing so, they are adapting standards that strengthen their industry. Each country is different. There's no uniformity in the European nations, in Asia, or in the United States as to where they go. We have some examples, but I won't go through them. If somebody wants to raise the question in our presentation, Mr. Chairman, I will be glad to deal with them.
I do want to raise a couple of points that have created a problem for us. Our major competition right now, which is killing us, is Japan, South Korea, and the European Community. They're areas of the world that want to build and ship into North America--the most open market in the world--but they won't accept any vehicles being sold back into their market. Where they do, they offset those by exporting themselves. Less than 5% of vehicles sold in Japan are built outside of Japan, and you can't get in no matter what you do unless you're wealthy and willing to pay a huge price to get over the barriers that are there and to buy a very expensive car. In Korea it's less than 3%. In the European Community it's about 12%.
In 2006 the European Community imported about 2.7 million vehicles as that 12%, but it exported 3.3 million vehicles, so it's a net exporter.
For the last 25 years, our country has had the most successful auto industry of any place in the world—quality, cost, productivity, and profitability. We meet every standard. This year we're going to have the first deficit in over 20 years, because of the lack of government recognition of our problems. So in looking at and talking about standards, the government must consider what it's doing to the jobs of Canadian workers in this industry.
We're in favour of new fuel economy standards, on the basis of reviewing the strengths and weaknesses of our domestic industry, and of developing standards that recognize the influence of the U.S. market on our production. We're the only country in the world with an auto industry that is fully integrated with that of another country that is 90% larger in market and production. We're also in favour of establishing standards by market class that will promote and reward technological developments, rather than encourage product substitution.
Because of our development under the 1965 Auto Pact, we build the major big vehicles—minivans, crossover SUVs, pickup trucks, and large cars—and the vast majority of these are shipped to the U.S. Mr. Chairman and committee members, two-thirds of the 2.5 million vehicles built in Canada last year were in the largest size categories.
More than 80% of the engines we build in our plants are V8 engines, and the rest are V6. We do not build a four-cylinder engine. To take a V8 engine plant and build one to produce the four-cylinder engines requires at least $1 billion, and you need to have a market for the fours that is not there today. So those things can't be ignored.
Despite our strong sales last year, our production fell by about 4%. Production has fallen from a peak of over 3 million units in 1999 to less than 2.5 million last year. We've lost over 500,000 vehicles per year from our peak, or 17% of our production, without any threat from mandatory standards that the industry cannot meet.
We are losing jobs in assembly. We are down from our peak in 1999 by 6,000 jobs, and we're down some 7,000 jobs in auto parts. We also have several thousand other jobs scheduled to be lost this year. Jeff Watson will tell you that in the city of Windsor there are over 2,000 Ford workers, and Chrysler's going to make an announcement next week that will also have a major impact on Windsor and Brampton. So our industry is going through incredibly tough times.
I'll end with our union's proposal, Mr. Chairman. We support fuel economy standards. We support the principle of mandatory fuel efficiency standards. In 2003 we joined with one of the political parties and a major member of the environmental community to sign a commitment to improve fuel efficiency standards by 25% by 2010, for the 2011 model year.
We still support a 25% fuel efficiency move, but it must be across all classes of vehicles. It can't apply so that some companies with smaller car or smaller engine production can take advantage to the disadvantage of others. So if it covers small cars, large cars, SUVs, and minivans, it will get us to the same point and not give advantage to some producers over others. We believe that we can reach this by 2014, if my colleague from Pollution Probe was correct and the technology is there.
The industry should be forced to do it. We also have to have enough flexibility as a government to say the industry has put its best foot forward and we've gotten part way there, but it may take a little more time. But I believe the standard is still achievable.
Regarding renewing the fleet, I won't repeat.
Regarding getting old vehicles off the road, I raised this with Mr. Flaherty. Currently we have incentive programs to improve houses, whether it's replacing windows and doors or putting all kinds of things in place to cut down the use of fuel. The same principle applies here.
The quickest way to reduce greenhouse gases in Canada would be a major program to get older vehicles off of the road. I believe the industry should be required to offer incentives. General Motors already does for vehicles over 20 years of age. If you scrap the vehicle—and I mean scrap it, so it can't come back through a used car dealer—they offer a $1,000 incentive on top of every other program.
We also support and propose a new fee rebate program called the green vehicle transition fee. It will be assessed on each manufacturer that sells into our market, based on each company's total Canadian sales. Under our proposal it would be $500 per vehicle. It would be earned back by those companies that make Canadian investments in green automotive technologies.
Finally, reducing greenhouse gases means reducing the amount of fossil fuels we consume. In addition to greater fuel efficiency and new technologies, we need a transportation strategy that will increase the availability, firstly, and the use of alternative or renewable fuels and reduce the use of vehicles overall. This requires investment in clean and alternative fuels, and major investments in mass transit, rail, as well as other efforts to reduce gridlock.
Thank you very much, Mr. Chairman.