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Unifor’s fight to secure jobs at Cami highlights the shift of work to Mexico under NAFTA

By Norman De Bono, The London Free Press

Striking Cami workers march Friday in a rally outside the Ingersoll plant. As the dispute nears its fourth week, there’s no end in sight. GM Canada and Unifor remain “far apart,” says the union representing the 2,800 workers. The two sides are to resume bargaining on Tuesday. (BRUCE CHESSELL/Sentinel-Review)

Striking Cami workers march Friday in a rally outside the Ingersoll plant. As the dispute nears its fourth week, there’s no end in sight. GM Canada and Unifor remain “far apart,” says the union representing the 2,800 workers. The two sides are to resume bargaining on Tuesday. (BRUCE CHESSELL/Sentinel-Review)

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It’s a microcosm of a larger fight.

As the strike by 2,800 workers at Ingersoll’s Cami assembly plant nears its fourth week, the standoff underlines what’s happened to Canada’s auto industry under the North American Free Trade Agreement (NAFTA) and why the stakes are so high, especially with a tough-talking Donald Trump in the White House.

Big auto assembly plants paying top wages, like Cami, have closed with that work moving south, from both Canada and the U.S., to low-wage Mexico.

The not-so-obvious parts of the industry here, however — the many parts plants that supply auto­makers, like those up and down Highway 401 in Southwestern Ontario — have boomed.

NAFTA has driven massive change in Canada’s auto industry, both good and bad, economists and industry watchers argue.

The continent-wide trade deal, enacted in 1994, has been slammed by Unifor as leading to the ruin of the Canadian auto industry and has been directly blamed for the ongoing strike by workers at Cami Assembly in Ingersoll.

But the trade agreement has helped the industry as well as hurt it, integrating our economy directly with the fortunes of the United States, some say.

“The numbers speak for themselves,” said Dennis Darby, chief executive of Canadian Manufacturers and Exporters.

Seventy-five per cent of our trade is with NAFTA partners, “and it has been positive,” he said. “In 1993, we exported less than $40 billion to the U.S. in vehicles and parts and now it is $75 billion today.”

Perhaps more importantly, it has forced industry here to specialize, become expert, so to speak. In the language of business, we have become “advanced manufacturers.”

That means low tech is out, high tech is in.

We can now boast of software development and technology in machining and parts-making that make us specialized. It also means a lot of industry has fallen, not able to compete with low-paying jobs, specifically in Mexico.

“There has been a push to investment, to automation,” said Kristelle Audet, senior economist with the Conference Board of Canada.

“But there has been a lot of investment in Mexico. It is a fact that today every single car manufacturer in the world has investment in Mexico. There has been a shift in auto assembly in Mexico, and NAFTA empowered that.”

It’s not hard to see why. Wages at assembly plants there range from $3 to $8 an hour, compared to $34 an hour here for workers at large auto assembly plants, like Cami. Its 2,800 workers are on strike, largely over job security language demanding it will not lose work, assembling the Chevrolet Equinox crossover vehicle, to Mexico.

Union leaders have called the strike a fight over NAFTA. After the plant lost production of the GMC Terrain in July to Mexico — along with the jobs of more than 400 workers — it became the “poster child” for what is wrong with the trade deal, they argue.

“In big-picture terms, what we have done is trade jobs in Ontario for automakers’ profits,” said

Jeff Rubin, economist and senior fellow with the Centre for International Governance and Innovation, who has written on the trade deal.

“There has been a huge shift in employment to Mexico. In the last 10 years, we have seen massive investment in industry in Mexico.”

The auto sector in Canada has lost about 45,000 jobs over 15 years, according to Statistics Canada. Its total has fallen from more than 170,000 in 2001 to 126,875 in 2016.

“From 2010 to 2015, the investment in vehicles in Mexico is five times the investment here,” said Rubin, a former chief economist with CIBC.

“That is not a surprise. Why wouldn’t they, given the difference in labour costs?”

In Canada under NAFTA, automakers have closed four assembly plants, while 10 have been shuttered in the U.S. In Mexico, eight have opened and there are now plans to open two more, according to figures from Ward’s ­Automotive.

But the Conference Board puts forward different figures when it comes to jobs and a more positive picture of manufacturing production, saying the auto sector employed 116,000 in 1994 and that dropped to 106,800 in 2016.

It also proposed the GDP in the auto sector — the value of goods made — has risen to $16 billion last year from $14 billion in 1997.

What has emerged is that while the number of major assembly plants has dwindled, parts suppliers and machining industries have seen growth. Industry that is small, specialized and high-tech has been able to compete.

It is also difficult to link any decline in Canadian manufacturing fortunes directly to Mexico. Consider that manufacturing exports from Canada were restricted after the 9/11 attacks in 2001, took another hit in 2008-09 during the recession and were hurt in the mid-2000s by the surge in Canadian currency.

So, the line becomes blurred as to how much blame Mexico and NAFTA must get, for a decline in auto manufacturing here.

“NAFTA has been singled out, but it is important to keep in mind there are numerous factors,” said Audet, the Conference Board economist. “In the auto sector, the past 10 years have seen a clear decline, but NAFTA is not the only ­reason.”

NAFTA also requires that any ­vehicle assembled has 62.5 per cent of its parts from other North American suppliers. It does not dictate where the supplier

must come from, but Ontario has won some of that work, said ­Audet.

“That allowed us to specialize, be more efficient, and that is what we do best. In the long run, that has been the shift,” she said.

Darby, of Canadian Manufacturers and Exporters, adds that ­employment in manufacturing has been stable, 1.7 million across Canada, in recent years.

“It is always dangerous to look at one sector,” Darby said of auto industry watchers not getting the full picture.

“It is true we don’t make as many toasters here as we used to. Manufacturing has changed, jobs have changed and many are now high-tech. The workforce has done a great job adjusting to the new ­reality.”

If NAFTA talks fail and U.S. President Donald Trump slaps a 30 per cent tariff on Mexican imports as he has threatened — and did to Canada on softwood and Bombardier — “that would end the Cami strike in a second,” said Rubin. GM would have little problem ensuring production in Ingersoll, if it costs more to import from Mexico, he reasons.

“If Trump thinks America workers have not done well, he should check out Canada,” he said.

Unifor would like to see wages, benefits and workplace health and safety standards, as well as ­environmental standards for manufacturers, made part of Canada’s demands under ­NAFTA for ­Mexican industry, said Bill Murnighan, ­Unifor’s director of research.

“We want there to be real ­unions to bargain collectively and raise wages. They talk about more trade, but there is nothing automatic about more trade delivering benefits. We have lost thousands of parts jobs, too,” he said.

“It is a troubling sign, not a positive sign. We are shipping value-added jobs to Mexico.”

Industry also wants changes to NAFTA, adds Darby. There was no internet in 1994 and now goods being shipped could use online pre-clearance technology.

They also would like greater ­labour mobility across borders and language addressing technology and software development, as part of exports, he said.

“NAFTA needs to be modernized,” said Darby.

ndebono@postmedia.com

twitter.com/NormatLFPress

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What is NAFTA?

• Jan 1, 1994, Canada, the U.S. and Mexico entered into the trade agreement.

• It eliminates most tariffs on products, with liberalization of trade in agriculture, textiles and manufacturing the major focus.

• It succeeded the Canada-U.S. Free Trade Agreement from 1987.

• NAFTA is now being renegotiated.

• A member country can exit NAFTA with six months’ notice.

Since NAFTA

• Four assembly plants have closed in Canada

• 10 have closed in the U.S.

• Eight have opened, and two more are planned, for Mexico

• Four million more vehicles are built in North America — Mexico got two-thirds, U.S. one-third and Canada has seen no growth.

• Mexico has nearly half the auto jobs in North America, but only eight per cent of the auto market.

Source: Unifor

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Canadian auto workers Parts and assembly

1991: 128,413 total, of which 65,416 were parts workers

2001: 170,631 total, of which 98,869 were parts workers

2016: 126,875 total, of which 71,524 were parts workers

Source: Statistics Canada

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Mexico auto production

2008: Two million vehicles

2018: Five million vehicles

Source: Unifor

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Gross domestic product (value of goods made)

Manufacturing: 1997: $78.8 billion; 2016: $80.7 billion

Auto sector: 1997: $14.3 billion; 2016: $16.3 billion

All industries: 1997: $405 billion; 2016: $634 billion

Source: Conference Board of Canada