Evidence of meeting #27 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was automotive.
A recording is available from Parliament.
4:20 p.m.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
That's why I asked the question.
You mentioned CETA, but what's the impact with respect to the TPP as well as free trade with China?
4:20 p.m.
President, Canadian Vehicle Manufacturers' Association
CETA is something that was negotiated we think in the appropriate way, where they factored in the integration of the industry. We want it to move forward. We see that export markets exist. As for China, we're not sure. We all have plants there. I'm not sure where the Government of Canada is at this point. We certainly know where the U.S. is. They don't appear to be interested at this point. Having a better understanding of what is to be accomplished by a China agreement is really important. The TPP is out there. You have the U.S. government, and I'm not sure where that government will be now or after the election.
4:20 p.m.
Liberal
4:20 p.m.
Liberal
4:20 p.m.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
I'd be interested in five more minutes on where the U.S. government's going to be in a few weeks.
Anyway, I'd like to pick up on some things you alluded to on carbon taxes and the cap-and-trade system. In your response to Mr. Jowhari, you noted that there's a lot of hope that if the system works and if they do what they say they're going to do, there'll potentially be reinvestment.
At the same time, in your opening remarks, Mark, you outlined that you're starting negotiations for an exemption on the carbon tax if it contains higher thresholds than what we see in the cap-and-trade system. How far are you with that? Is it something that you feel there's an opening for?
4:20 p.m.
President, Canadian Vehicle Manufacturers' Association
If I may, I'll throw out a point of clarification.
We're not looking for an exemption. What we're really trying to stress here is that if the federal government is attempting to ensure that there's equal challenge across the country in terms of reducing greenhouse gas emissions, and if they're going to establish the floor on a carbon price to do that, it really has to coordinate with those provinces that already have plans in place, such as Ontario, Quebec, Alberta, and British Columbia.
The key thing here is that we cannot allow the stacking of additional costs on top of those plans that already exist. To do so would further undermine our competitiveness. So recognize the plans that are in place. If the government feels it has to use that as the basis to persuade other provinces, well then, it has to be done, but it has to be done in collaboration with those provinces.
4:20 p.m.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
I think the government, to be fair, has outlined that they're expecting this to be across the country in some sort of uniform manner that puts a cost on carbon.
I guess the question that you still leave me with is if there's going to be an increase cost on carbon in Ontario by 2022, which is generally what the feeling is, you're saying it will put an additional issue in your hands based on competitiveness with those just south of the border, or way south of border in Mexico. To me, there is only one answer for you, which is to look for exemption, like we did with ORPP.
This leads me to the second question. Have you looked for and negotiated an exemption on any CPP changes and payroll taxes that are coming?
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
There's a lot of things there.
First off, I think with the federal government and Ontario, when you talk about exemption, I guess it would be Ontario that needs that exemption, in that sense.
I think really what we're talking about is to recognize that there is a cap-and-trade program there, that they are imposing costs already on the price of carbon, and that should be sufficient at this point in time. It doesn't mean that won't change in the future, but for us, we're already incurring high electricity costs that we don't see south of the border in our competing plants in the United States, and additional costs of carbon and whether we have to buy credits, which is really a tax on our business that we don't have in those other jurisdictions. That's what we need to avoid, so it doesn't further undermine our competitiveness. We still have a lot of good things going on in Ontario and Canada.
The issue for climate change is not to have something that's necessarily an issue across Canada per se, although we as a country have to meet our commitments that we have now made internationally. The real issue here, from a competitive standpoint, is north-south, whether it be the United States or Mexico. Our primary competitor right now, given the cost of labour and so forth, is really the United States, so we can't be adding to those costs.
On the CPP, under the ORPP originally.... We have some fabulous companies as well that have rich pension plans, which are defined benefit plans or a combination of defined benefit and defined contribution. They are rich plans, and under the ORPP, the issue of equivalency was there. It was acknowledged and it was accepted. We don't have that commitment at the CPP level. We could well be adding cost in that respect to our plans that are already significant and quite rich plans. That's the issue.
4:25 p.m.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
Does your association have targets on an annual basis for job creation within our marketplace?
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
I'm not aware of any targets. We hire on the basis of need. Obviously, if we're expanding, whether it be in response to the need to produce a certain number of vehicles in our plants, then we will hire. Similarly, the same holds true for our supply chain, and they supply us, so if we're going all out.... We're pretty much at full capacity now. There were some announcements made, because of expansion, to hire new people. I wouldn't say we set targets, but we will respond to need.
4:25 p.m.
Conservative
4:25 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
Mr. Nantais, your association seems to represent only North American manufacturers. It doesn't include, say, Toyota Canada or Honda Canada. Is that correct?
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
Yes, officially that is correct.
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
That's the way it has always been. They have established their own associations. We don't represent Honda manufacturing or Toyota manufacturing, but I can say on manufacturing issues that we have many discussions. In many instances they support what we say with respect to manufacturing issues, but they're not officially members.
4:25 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
Basically, you represent the voice of the North American manufacturers.
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
We do. We represent those companies which have been here for 100 years, supplying many high-paying jobs.
4:25 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
From 2009 to 2015, employment in the vehicle manufacturing grew by 16%, while production rose by 72%. What is the reason for these productivity gains?
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
If you want to remain competitive, you have to be productive, We reinvest in our plants, refurbish those plants. We look for productivity gains, so automation, other processes—
4:25 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
It's quite substantial. Employment only grew by 16% and production went up by 72%. That's quite a significant rise.
4:25 p.m.
President, Canadian Vehicle Manufacturers' Association
That speaks amazingly to our workers, and to our facilities which are very productive, some of the highest quality, award-winning quality plants that exist. That speaks tremendously well for Canada.
4:30 p.m.
Liberal
Chandra Arya Liberal Nepean, ON
Mr. Volpe, between 2005 and 2009, production dropped by 50% and employment fell by 37%, but between 2009 and 2015, production increased by 60% while employment rose only by 16%.
4:30 p.m.
President, Automotive Parts Manufacturers' Association
I think there are two things. Along with Mark's theme, parts are getting more sophisticated and the competition is getting more sophisticated. You're having multi-component modules that you're supplying to your customer, and the customer is asking for you to put more value on a specific piece that you're supplying. That means automation. Sometimes it means robots, but mostly that means process improvements in manufacturing. It's a global trend.
The window that you have taken captures the worst year in automotive history, in 2009. If you broke that number out from 2005 to 2009, that drop really is the crash of 2009, when the North American production number went from 17 million a year to nine million a year. I would probably use a different window than that.
