US Automakers shed 16,587 Ontario jobs between 1999-2009 despite $1B subsidy
US automakers have already shed the bulk of the 16,587 lost auto jobs in Ontario between 1999 and 2009 – a staggering 36% of GM, Ford and Chrysler's combined 1999 workforce.
And why did the federal and provincial governments give a staggering $1 billion in subsidies to these three companies over the same period???!!! Ostensibly to protect jobs.
But even $1 billion of our hard earned taxpayers’ dollars did not protect one single job!!
What would have actually protected jobs would have been really tough fuel efficiency standards -- something the federal government has not had the courage, conviction or foresight to do.
The price of oil has risen dramatically from just over $10 a barrel in 1999 to $90 a barrel today –- so it’s no coincidence that Detroit automakers sales have plummeted exactly in unison as gasoline prices have risen. GM, Ford and Chrysler produce vehicles with the worst average fuel efficiency of any of the major car companies worldwide.
What will happen when oil breaks $100 a barrel? $150 a barrel? $200 a barrel? Expect more layoffs from GM, Ford and Chrysler.
And these three companies have consistently resisted, lobbied against any increases in average fuel efficiency. They still refuse to improve the average fuel efficiency.
And here’s why the Green Party is the only party to address this issue. Under Prime Minister Martin’s Liberal government, the auto industry received hundreds of millions of dollars in subsidies. In the 2006 federal election the Conservatives federal said they would continue this practice and of course, federally because Detroit-based car companies in Canada are unionized the NDP support hundred of millions of hand outs. Similarly at the provincial level all the old-line, traditional political parties supported it too.
Do you know that if every vehicle in North America got the same fuel efficiency as my Toyota Prius (more than 50 mpg) that North America would require no foreign oil imports??!! In other words the key to energy security, the key to economic security, the key to protecting manufacturing jobs, the key to climate change security is in tough energy efficiency standards.
Here’s an article from today’s Globe and Mail:
AUTO MAKING: CHRYSLER CUTS 10,000 JOBS
Cerberus swings the axe
'The world has gotten tougher and you have new owners with a fresh view'
GREG KEENAN
AUTO INDUSTRY REPORTER with files from Bloomberg News
November 2, 2007
Chrysler LLC is eliminating more than 10,000 jobs and scrapping some vehicle lines, making good on its new owner's plan to accelerate a deep restructuring begun in February at the No. 3 Detroit auto maker.
Cerberus Capital Management LP, which took over Chrysler on Aug. 1, is cutting the company's work force and scaling back production by almost the same amount as Chrysler's previous owners did in February.
The 10,000 jobs to be eliminated - including 1,100 at a factory in Brampton, Ont. - will trim Chrysler's manufacturing work force to the mid-30,000 range by the end of the decade, roughly the same size as the manufacturing work force at Toyota Motor Corp. in North America. While Chrysler cuts, Toyota will boost its manufacturing employment to about 34,000 with the addition of new assembly plants in Woodstock, Ont., and Mississippi.
The Chrysler cuts are the latest move in a year of dramatic upheaval in Detroit as the once-dominant car companies based in the Motor City adjust to years of market share losses. Ownership changes, executive shuffles, concessions by the United Auto Workers union and above all, job cuts, have dominated the agenda at Chrysler, Ford Motor Co. and General Motors Corp.
Cerberus will add 12,000 job cuts to the 13,000 announced in February before the private equity firm took over the firm, and will also scrap four models that are selling poorly. All overtime will be eliminated.
"The world has gotten tougher and you have new owners with a fresh view," said veteran industry observer John Casesa, managing director of Casesa Strategic Advisers LLC in New York. "The speed of decision making reflects private ownership."
Before Cerberus took over Chrysler as the DaimlerChrysler AG marriage dissolved, union leaders expressed fears that a private equity owner would make further drastic cuts at the auto maker.
But Canadian Auto Workers president Buzz Hargrove said after meeting Cerberus founder Stephen Feinberg that he was reassured that the private equity company was going to restore Chrysler as an American icon and rebuild manufacturing in North America.
United Auto Workers president Ron Gettelfinger, who had vowed to prevent the sale of Chrysler to private equity interests, also agreed not to fight the sale after hearing similar reassurances.
But the U.S. housing crisis and the rising price of oil, and hence gasoline, have changed the equation.
"The market situation has changed dramatically in the eight months since Chrysler established the recovery and transformation plan as its blueprint," Chrysler chairman and chief executive officer Bob Nardelli said in a statement yesterday. Sales in the U.S. market this year will be considerably less than the 17.2 million projected when the recovery and transformation plan was announced in February and will stay stubbornly soft next year, Mr. Nardelli said.
Mr. Hargrove, who as president of the CAW represents the workers in Brampton who are losing their jobs, accused Mr. Nardelli of being "dishonest" by blaming the cuts on a poor market.
The real problem, he insisted, is a flood of imports from Japan and South Korea that are displacing Detroit Three vehicles in their home market. Problems in Canada are aggravated by the high value of the Canadian dollar, he added.
"There's a crisis in manufacturing," he told reporters yesterday, lambasting the federal government for cutting taxes and Bank of Canada Governor David Dodge for not reducing interest rates to halt the rise in the value of the dollar.
Two vehicle models built in Canada will be discontinued - the Dodge Magnum, which is built in Brampton, and the Chrysler Pacifica crossover utility vehicle assembled in Windsor, Ont.
The Chrysler Crossfire sports car and the convertible version of the Chrysler PT Cruiser will also be scrapped.
The production cut in Brampton means about 100,000 fewer vehicles will be made there next year.
That and the Pacifica move will further damage the already devastated auto parts sector in Canada, Mr. Hargrove said.
Magna International Inc., for example, supplies $2,200 (U.S.) worth of parts on the Pacifica, including the seats, which are made at a dedicated plant in Windsor, Ont.
Magna has another $900 worth of parts on every vehicle that comes out of the Brampton plant.
Halting production of the four vehicles represents "blinding flashes of the obvious," said analyst Joseph Phillippi, who heads Auto Trends Consulting Inc. in Short Hills, N.J.
The Jeep Commander sport utility vehicle and others should also be dispatched, Mr. Phillippi said.
He recently drove the new Chevrolet Malibu from GM and said its interior surpasses those of the Toyota Camry and Honda Accord, long the leaders in the segment.
The interiors of the redesigned Chrysler Sebring and Dodge Avenger don't even come close to the Malibu, he noted.
MAGNA INT'L (MG.A)
Close: $89.81 (Cdn.), up 19¢
The Detroit Three have trimmed more than 20 per cent of their Canadian work forces since 1999 - and more trims are on the way. General Motors is set to cut another 4,200 jobs from its Oshawa plants; Chrysler will trim 1,100 jobs from its Brampton operation.
CAW members Ford GM
1999 12,763 12,920 20,704
2007 10,000 10,000 15,000
1,100 more losses in Q1 2008 1,200 more losses at Oshawa truck plant by January 2008, and 3,000 losses in Oshawa within next 2 years.
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What is the GREEN Party's answer?
Greetings:
I disagree with tax payer subsidies and certainly not surprised by our continued shift to non skilled , low paying , future-less , dead end jobs while Harper seems to be happily touting low unemployment numbers.
His grand standing tax cuts had a Nero ,fiddling and Rome burning feel to them as in my view they throw gas on the fire with Canadian markets.
The devaluation of the US dollar without them raising all their prices is another game being perpetrated by corporate forces.
23% is no small matter and things will only get worse in my view.
The GST cut again is a total sham and disastrous for cash strapped municipalities needing that cash to rebuild our infrastructure.
So many other things being neglected while they make the wrong policy moves.
Under the current trend towards integrating North America into one big market it will only get far worse.
Do we have specific policies to help these poor powerless Canadian workers in the Auto sector?
Cheers
juror.ca
endprohibition@telus.net
Capital investment through the tax shift!
The tax shift that the Green Parties are touting is the best way of creating good paying jobs in the emerging green sector. The best way to create good paying jobs is by increasing productivity. The reason why auto-sector jobs are so well-paying is because of all the surplus wealth created by the robots, etc, which means that the production per worked has grown so fast that the company can afford to pay high wages. The way we get high productivity is by creating incentives for businesses to invest money in new technology that would increase output per worker.
The Green tax shift would do this by creating an incentive for investment in new energy-saving technology by putting into place carbon and other resource/pollution based taxes, while at the same time freeing up money in the company to do so by cutting the corporate and pay-roll taxes. This would give companies both a carrot and a stick for investing in tomorrow's economy.
On a more positive note, the reason why the American auto companies are getting clobbered is because they fought tooth and nail against fuel efficiency and refused to invest in the future. In contrast, the Japanese did, which is why they are doing much better. The reasons why GM, Ford and Chrysler invested in Ontario still exist, which is why Toyota has carpet-bombed Woodstock with money to build their huge new factory. How many of those ex-Chrysler workers will end up working for a Japanese company that pays pretty good wages too?
"There is always an easy solution to every human problem--neat, plausible, and wrong." H.L. Mencken
Cutting income taxes may have less benefit for GM FOrd,Chrysler
Lambton Kent Middlesex EDA (SW Ontario)
We wish it were true that cutting taxes on income would leave money in companies to invest in productivity. But these 3 companies have so very little earnings to pay tax on, that they would take forever building any investment reserves.
Not only that, but they have all piled up an incredible amount of debt on low equity so that they can not go to borrowing markets to raise capital.
Having these 3 companies go through bankruptcy so that their debts are wiped out (bond holders become the owners) may be necessary to get these companies out of the very deep hole they have dug for themselves. In the process, that bankruptcy does not raise a lot of investment capital. We can expect that a lot of bond holders will feel a bit burned and unwilling to dump a lot of capital into the pot for investment. But what it does is change the companies profitability picture, by removing a mountain of interest payment from expense columns. Suddenly the income tax reductions do start to make a difference.
None of that speaks to the problem that they are building vehicles that are hard to sell in a high fuel world. They might find it practical to sell parts of the company to a competitor who can use it to produce proven high efficiency products, and use the money derived to fix their own shops.
Nobody wants to discuss lower wages as part of a solution, and it is not one as long as they are making the wrong products for the market. But there are probably too few dollars coming in to keep the number of employees at historic wages. Stockholders and bondholders are not prepared to provide that extra cash, and the company has yet to persuade customers to offer voluntary price increases.
I think that having the Canadian parts of these companies carved off as separate companies, so that a government financing move is specific to Canada would have to be part of a package. Government funded loans should be considered to restructure the product lines, but those loans should be expected to be converted to an equity position as the 3 companies go bankrupt.