Thank you, Mr. Chair and members of the committee, for the opportunity to speak to you today on behalf of the 16 members of the Global Automakers of Canada.
The Global Automakers of Canada is a national trade association representing the Canadian interests of 16 of the world's most significant automakers.
Our members are collectively responsible for more than 62% of vehicle sales in Canada, and our two manufacturing members, Toyota and Honda, are Canada's largest and second-largest vehicle producers, representing, through to the end of September this year, 75.5% of Canadian light-duty vehicle production.
Additionally, GAC member Volkswagen and its partner PowerCo remain in the process of building up the $7-billion battery factory in St. Thomas, Ontario, which is slated to employ up to 3,000 people directly. Importantly, the members directly and indirectly employ more than 216,000 people, contribute almost $25 billion to Canada's GDP and generate more than $10.5 billion in government revenues.
Stellantis is not one of my member companies. Even if it were, I would still have no line of sight into the agreements between the company and the federal government because that's a confidential agreement. What I can say about Stellantis is that, while at American Motors (Canada), my father worked with officials from the federal government and Renault to secure the building of the Brampton plant in question now. While few remember American Motors, that facility became an important piece of the Chrysler-Stellantis Canadian footprint, revitalizing the automotive industry in Brampton.
That is to suggest that, while the committee is looking at government commitments made to Stellantis, I believe the focus of this committee's work needs to be more broadly on developing a more resilient, holistic and long-term strategy to keep the automotive sector, from parts and vehicle manufacturing all the way to sales and distribution, strong and healthy, including navigating the immediate headwinds that Mr. Kingston and Mr. Williams have highlighted. As part of that strategy and in order to build one of the strongest and most competitive economies in the G7, we will need to ensure that any carrots or sticks related to the attraction and support of automotive investment are competitive with those of other nations.
The auto sector represents Canada's second-largest export sector by value, and it needs more than shorter-term and ad hoc programs to attract investment and support programs competitive with other nations, which is important. We also need to ensure that these programs do not get misrepresented or politicized. For instance, production-linked tax credits only exist if there is production and tax revenue to begin with. All parties should respect these provisions. To do otherwise leads to misperception across Canadian society and compromises the integrity of these programs that are necessary to ensure that such investments do not go elsewhere.
A poll undertaken last week by Pollara suggests that concern for the automotive industry is widespread, with 74% of Canadians and 79% of Ontarians believing that if the automotive sector collapsed, it would have a “devastating” impact on the Canadian economy. We agree.
While there is rightful concern about the future of the automotive industry in Canada, let's not lose sight of the potential that exists in this sector if we work quickly to establish something like the Royal Commission on the Automotive Industry undertaken by Vincent Bladen in 1961. With that important work undertaken, the framework for the 1965 Auto Pact with the United States was created, which established managed, tariff-free sectoral free trade in the automotive industry between the two countries.
Our auto sector is very different now than it was in the 1960s. It now includes high-value areas, such as critical and rare earth minerals required for batteries, and semiconductors, cybersecurity and software related to connectivity and automation. These areas represent opportunities for Canadian advantage in an integrated North American automotive industry, and we need to develop a new model that can ensure that we are a partner the U.S. truly cannot live without.
Second, if we cannot be assured of access to the United States as part of that integrated North American industry, I think that Canada must expand its horizons with the G7 countries that we already have free trade agreements with and beyond. Previous governments of different political stripes have done a good job of setting up Canada with multiple FTAs that need to be considered as part of a new auto strategy.
While Canada does have real strengths in each of the areas noted above, without a comprehensive strategy, these strengths may just remain opportunities on paper that are unable to be realized.
Thank you for the opportunity to be here today. I look forward to your questions.