Hudak's "Corporate Welfare" Pledge Jeopardizes Tens of Thousands of Auto Jobs
September 30, 2011, 2:15 PM EST
Tim Hudak's promise to end all provincial government subsidies to business, in the name of ending so-called "corporate welfare," would destroy Ontario's chances of winning new auto investments that are crucial to the future of several Ontario auto communities, warns CAW National President Ken Lewenza.
"The puritan Conservative position against subsidies is driven by ideology, not economic reality," Lewenza said in Toronto. "If enacted, this promise would mean we'll never receive another major auto investment in this province."
Hudak's pledge to end all business subsidies appears on page 15 of the Conservatives' "Changebook" platform document.
In capital-intensive, globally mobile industries like auto and aerospace, it is a near-universal practice for host governments to provide a range of incentives to attract new investments (including capital grants, infrastructure subsidies, and training subsidies).
In Ontario for the last decade, every major capital project by global automakers has received major financial support from both the federal and the Ontario governments. Typically, each level of government kicks in about 10 per cent of the capital cost of the new investment, for a combined subsidy of around 20 per cent. This has been the practice both at new "greenfield" sites (such as Toyota's new plant in Woodstock) and for the retooling of existing factories.
Several major Ontario auto facilities will require major retooling within the term of the next Ontario government, including plants in Brampton, Oakville, Ingersoll, Oshawa and Windsor.
"Without significant participation by both the provincial and federal governments, not one of those crucial projects will go ahead," Lewenza said. "Tens of thousands of auto jobs in Ontario will be jeopardized if a Hudak government puts naïve philosophical convictions ahead of concrete support for this vital industry."
"Of course, we'd all rather see companies investing in this province out of a sense of social responsibility," Lewenza said. "But that's not how most industries work anymore. You have to have money on the table, in order to play in the game."
Government participation is all the more important today, Lewenza noted, in light of actions by competing jurisdictions (including the U.S. and Mexico, which also pay large investment subsidies), the over-valued Canadian currency, and the need for auto companies to invest in new environmental technology and other innovations.
About 95,000 Ontarians currently work in auto assembly and components manufacturing. About 9000 new auto jobs have been regained in the province since June 2009 - the worst point of the global financial crisis. (Source: Statistics Canada Catalogue 281-0023). Government participation in rescuing GM and Chrysler, and supporting a range of recently-announced investments (by companies like Ford, Magna, and Toyota), has been essential to that partial rebound.