Productivity, Investment and Technology

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


Productivity, Investment and Technology


Productivity

Auto Industry - Labour ProductivityAverage productivity levels in the Canadian auto assembly sector are extremely high, thanks to the skills, work effort, capital equipment, and complex production systems that are used in auto manufacturing. Table 6 indicates that in 2010 the average auto assembly worker produced close to $300,000 in value-added (or GDP) per person per year – or abut $142 of value-added per hour. That’s more than four times as high as the economy- wide private-sector average.

Auto Industry - OECD productivitéWorkers in the auto parts sector produce on average over $100,000 in value-added per year. That’s 12 percent more than the average for all manufacturing, and 90 percent more than the average for the whole private sector.

Figure 11 indicates that Canada ranked very near the bottom of all developed industrial countries in annual productivity growth over the past decade. Average annual productivity growth during the decade as a whole was a meagre 0.4 percent per year – good enough to rank 30th out of the 34 member countries in the Organization for Economic Cooperation and Development (OECD).

Investment and Technology

The auto industry is a very capital-intensive part of the economy. Each worker in the assembly sector uses, on average, close to $400,000 worth of machinery and equipment to perform their work (compared to less than $100,000 for the average industry in Canada).

Indeed, a significant weakness in Canada’s recent economic performance, that has significantly hampered our national recovery from the 2008-09 recession, has been chronic weakness in overall business investment spending.

Business capital investment fell dramatically during the financial crisis and subsequent recession, and still has not regained its pre-recession levels (in real or in per capita terms) despite three years of official economic “recovery.”

Business profits and cash flow have remained strong, but the share of those funds reinvested in Canadian capital projects has been weak – with the result that Canadian non-financial corporations have accumulated an unprecedented stockpile of idle cash and short-term financial assets.

Auto Industry - idle holdingsBy end-2011, non-financial corporations possessed close to $600 billion in short term liquidity (Figure 12); those idle holdings have actually expanded by close to $200 billion since the financial crisis (at a time when other stakeholders in Canada’s economy, namely consumers and governments, have taken on significant new debts to support spending despite the downturn).

Many observers, including Bank of Canada Governor Mark Carney, have highlighted this failure of business investment as a key factor behind Canada’s sluggish growth, job-creation, productivity, and innovation (see Carney, 2011.)

Across-the-board tax cuts and other no-strings-attached incentives
to corporations have not done the job.

Auto Industry - Comparison of Conservative and Liberal plans for federal corporate taxIl a tout à fait raison, réduire les impôts des sociétés a peu d’influence sur l’investissement privé, elle se dégrade à chaque année, on le savait, et je vous l’avais dit. (1)

C’est beaucoup plus compliqué que cela, les onze facteurs de la liberté économique vont influencés un investissement privé, et les impôts n’est qu’un seul facteur.

Pourquoi les usines de l’industrie de l’automobile s’implante dans le sud des États-Unis, ou l’industrie manufacturière canadienne se délocalise vers les États-Unis, plusieurs facteurs, en voici quelqu’un.

1.      Les salaires et la protection sociale sont moins élevés.

2.      Normalement, les États du Sud ont une  juridiction ‘Right to Work’, aucune obligation syndicale.

3.      Un plus grand bassin de population.

4.      Et dans l’ensemble une plus grande liberté économique selon les onze facteurs.

Réduire les impôts est un échec flagrant du manque de discernement du gouvernement Harper, pour stimuler l’économie canadienne.

Il a surtout remplis les poches des grosses banques, des grosses compagnies pétrolifères et tout acabit pour augmenter leur compte de banques, mais certainement pas pour améliorer la productivité par l’investissement privé.

Le thème ‘no-strings-attached incentives’ est crucial et on va y revenir plus tard.


 

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

Mexico

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

Productivity

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

Conclusion

Willingness by policymakers to play an active role.