Center of gravity is clearly shifting south

Cahier spécial : A policy vision to escape the race to the bottom

centER of gravity within North America
is clearly shifting south

Le texte est dur, mais très réaliste, arrêter de croire que tous est beau et tout le monde est gentil, les pays qui s’en sortent, joue dure.

Regardez l’exemple du Brésil, il a dit à Apple va te faire foutre avec ton iPhone, ton iPad et toutes tes babioles, si je ne les fabrique pas dans mon pays, je t’empêche de les vendre.

Il faut commencer à  avoir de véritables ententes de réciprocité :

Produits finis pour produits finis
ou sans cela va te faire voir ailleurs.

Les ententes de l’OMC il y a plus de 10 ans :

Furent une entente entre oligarques, NON,
entre PEUPLE des pays industriels et PEUPLE des pays émergents.

Les États-Unis sont plus de 313 millions et nous 34 millions alors si on ne corrige pas le tir, ils vont faire d’une bouchée de nous.

De véritable entente commerciale de réciprocité

Ex: Tu veux acheter de la matière pas de problème, mais pour chaque dollar de matière première que tu achètes, tu achètes 50 % de produis finis.

Peut importe la méthode utiliser, mais il faut protéger nos compagnies qui ont de la valeur ajoutée et qui sont de véritables générateurs de richesse, non une industrie de ressources non renouvelables qui est très cycliques et très risquées selon l’humeur de l’économie et qui rapporte très peu autres que le Pétrole ou le Gaz.

Bienvenue dans la Réalité économique.

Re-thinking Canada’s : A New Policy Vision

In the current policy regime, in which the global economy is governed by aggressive corporations with no accountability to the countries and communities where they do business, the outlook for future investment and employment in Canada’s automotive manufacturing sector is not promising.

Automakers are now capable of producing high-quality output,

·         assembled by desperate and often repressed workers,

·         from jurisdictions where labourcosts are a small fraction of those in any industrialized economy (including Canada).

Why would they continue, in the long run, to invest in Canada or similar jurisdictions, unless they face some kind of policy or political compulsion to do so?

Mere inertia – the fact that automakers have major fixed investments here, which are impossible to relocate – ensures there will continue to be an important manufacturing presence for some time into the future.

The whole industry cannot disappear overnight. But the industry’s center of gravity within North America is clearly shifting south, and rapidly (see Klier and Rubinstein, 2010), heading toward Mexico and the right-to-work states of the southern U.S.

And it won’t stop there

As globalization continues to exert its influence, we can expect massive vehicle imports from other low-wage economies (like China, Thailand, or India).

Trying to slow that southward migration of investment by reducing compensation here in Canada would be fruitless and self-defeating  

·         merely slowing down the inevitable at best,

·         and sacrificing the quality of life which is supposed to be the whole point of economic development.

What is ultimately required is a more pro-active policy approach to defend Canada’s share of a vital industry, such as the measures we propose in this document.

Moreover, every sacrifice on the part of workers desperately trying to protect future investment can be overwhelmed by a few days of trading on the currency markets, so long as the upward flight of our loonie is allowed to continue unfettered. For example, in March and April of 2009 CAW members at General Motors and Chrysler ratified emergency contract amendments that reduced active hourly labour costs in Canadian plants by around $7 per hour (and that also stabilized legacy costs by restructuring pension plan funding and creating new health care trust funds for retiree health benefits).

Yet in the six months after those contracts were ratified, the Canadian dollar rose by 15 cents against its U.S. counterpart, adding about $9 to all-in CAW labour costs (measured in U.S. dollar terms).

In terms of international cost competitiveness, therefore, the impact of the unprecedented contract changes in 2009 was more than offset by just six months of unfettered currency speculation.

So long as Canada’s petro-dollar is allowed to float freely (more beholden to the mood swings of financial traders than to the real fundamentals of our economy), trying to improve cost competitiveness by reducing labour compensation is like swimming against a rip tide: the likely outcome is drowning.

Other important industries have disappeared from Canada entirely, as a result of similar business forces: including manufacturing sectors like textiles, clothing, appliances, and most electronics. The theory was that displaced Canadians would find more “productive” work in other industries, to replace their lost jobs, thanks to the magical workings of supply and demand.

Exacte, la pensée magique de la mondialisation, malheureusement, elle détruit beaucoup plus d’emploie quelle en crée, mais en plus, celle qu’elle crée sont moins bien rémunérai.

That hasn’t happened, of course: unemployed manufacturing workers have been forced to seek work in low-wage service industries, or to drop out of the labour market altogether.

We do not accept this grim scenario as natural, efficient, or inevitable.

The deindustrialization which Canada is experiencing does not reflect normal or efficient “market forces.” It reflects the long-run impact of discretionary policy choices which governments have made, influenced disproportionately by the interests of powerful, wealthy corporations and the investors who own them.

As indicated earlier in this report, there are plenty of examples from other auto-producing jurisdictions (including high-wage economies such as Germany and Japan) which have refused to accept the long-run demise of this crucial, value-generating sector as a given. Canadian policy-makers have the autonomy and the power to take a different course of action, rather than continuing to justify current and future hardship as a natural, inevitable outcome in a “global economy.”


Tables des matières

1.       A policy vision to escape the race to the bottom

Summary :

Global pressures on the industry are more severe all the time

Impacts of a Canadian dollar

we must adopt a new approach

2.       Decline in auto manufacturing employment in Canada

To Hell and Back – Canada’s Auto Industry After the Crisis

Industrialized countries experienced a decline

Preventing plant closures

Government intervention

3.       Automotive trade deficit reached an all-time record of $15.6 billion

Auto  Industry - Free Trade

Canada-U.S. Auto Pact

World Trade Organization

Trade Balance


4.       CANADIAN Petro-Dollar

CANADIAN Petro-Dollar

5.       Race to the bottom

Race to the bottom

Donc, à qui profite la mondialisation ?

Les gagnants

6.       Productivity, Investment and Technology

Productivity, Investment and Technology


Investment and Technology

7.       Center of gravity is clearly shifting south

Re-thinking Canada’s : A New Policy Vision

And it won’t stop there

We do not accept this grim scenario as natural, efficient, or inevitable.

8.       Free trade theories failures

Re-think Trade Policy

With every other trading partner

Optimistic predictions of the free trade theories failures

Canadian trade negotiators have a responsibility

9.       The Bank’s power to bring down the dollar is unquestioned

Intervene to Reduce the Canadian Dollar Exchange Rate (1)

Canadian dollar r far above value

Theory freely floating exchange failures

Bank of Canada interventions.

10.    Restrict foreign resource takeovers

Intervene to Reduce the Canadian Dollar Exchange Rate (2)

Slowing down resource developments (especially in the oil sands)

Preventing foreign takeovers of Canadian resource assets

11.    Canada back is a lack of political creativity


Willingness by policymakers to play an active role.