The Impact Of The Automotive Industry In Canada

The importance of the automotive industry to the Canadian economy should not be understated. The health of the industry in the country is often an accurate indicator of the overall health of the economy. Throughout the years, the “Big 3” auto-makers have had their share of ups and downs. The low points in particular have led to much debate on whether the companies should be bailed out by the government, or forced to live with the consequences of their irresponsible business practices. This debate might be easily answered, except for the fact that the health of the auto-industry has large effects on the health of many different sectors of the Canadian economy. Through studying the impact of the industry on the rest of the Canadian economy,

While the North American companies were taking substantial losses on the production of each vehicle, the Japanese companies were turning a hefty profit, all while dealing with the same negative factors (saturated market, high costs of fuel, economic downturn). The Japanese companies reacted to poor market conditions with pay cuts, and reduction in production, and inventory before the problems were too large to overcome. These changes that were made by the Japanese companies had direct effects on employment in Ontario, as many of their plants are located in the

The question is whether or not the provincial, and federal governments are willing to spend enough to bring the companies back. Logic dictates that the auto industry is very important to the Canadian economy, and therefore almost no price is too high. The main problem is that even if we do offer incentives to the companies, Mexico’s much cheaper labour give them a great advantage over Canada. Nonetheless; in my opinion, the automotive industry is much too important to the overall economy of Canada to let them walk. As mentioned earlier, the downfall of that industry here will have drastic run-off effects. Besides strictly financial incentives, Canada must also highlight its competitive advantages; we have many highly productive plants, and an educated, productive labour force. As suggested by Leamington Ontario Mayor, John Paterson, an idea that the provinces could implement would be to allow municipalities to offer their own incentives to the auto-makers (or any businesses). This practice is common in the United States, but isn’t allowed in Canada. Municipalities could offer free land, or deferred taxes for a number of years (Ontario Said,