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Tuesday, April 30, 2019

ANALYSIS/OPINION:

North America has long been one of the world’s largest auto producing sectors. But it’s not the economic powerhouse it used to be.

The International Organization of Motor Vehicle Manufacturers’s 2017 production statistics ranked China first in total auto production at 29,015,434. That’s an increase of 3.19 percent from the previous year. The United States is second at 11,189,985 (decrease of 8.13 percent), while Canada has slipped to 11th at 2,199,789 (decrease of 7.21 percent).


Whereas the main concern used to be Japan’s auto industry, which still ranks third overall, it’s now coming from other parts of the world. Countries like South Korea, India and Brazil have leap-frogged into the top 10, and emerging auto markets in Turkey, Indonesia and Iran are inching closer.

The U.S. and Canadian governments know they have to become more competitive. Yet, there’s a noticeable difference in the way each country has approached this issue — and only one of them seems to be doing it correctly.

Canadian Prime Minister Justin Trudeau faces the possibility of a century-old GM plant in Oshawa, Ontario, being permanently shuttered this December. GM spent billions in the 1980s to create this “autoplex,” although it’s currently running at half-capacity. A total of 2,973 jobs will be lost, of which 2,522 directly work at this plant.

That’s not his only concern. A Fiat Chrysler plant in Windsor, Ontario, announced last week it will be eliminating its third shift due to reduced minivan sales. This will lead to the loss of 1,500 jobs — and potentially, the plant itself.

The Liberal prime minister promised GM workers he’ll get them “back on their feet” and claimed to be “deeply disappointed by Fiat Chrysler’s decision” on Twitter. That’s fine, but so what? Actions, not words, will help stop the bleeding — and he’s failing miserably.

Mr. Trudeau likely knows Canada’s manufacturing sector has declined since the end of World War II. It currently hovers around 10 percent of GDP, largely due to high taxes, frequent government interference and a less-than-friendly business environment. To encourage auto companies like GM and Fiat Chrysler to stay in Canada, the PM needs to offer viable tax incentives and significantly reduce the corporate tax rate.

The problem is Mr. Trudeau isn’t a strong, capable leader who’s willing to fight to save the auto industry. He’s not a policy wonk, has displayed a poor grasp of economics since becoming Canada’s PM in 2015, and refuses to change his perceived image of a tax-and-spend Liberal. In doing so, he’s hurting the financial future of local autoworkers, which could cause more plants to shut down, cost plenty of jobs — and wreck the Canadian economy.

President Donald Trump hasn’t necessarily acted like a champion of the free market, either. His support for economic nationalism, including tariffs on aluminum and steel, and targeting auto parts built in foreign countries, reeks of big government and high taxation. He’s also faced auto plant closures, including a GM plant in Lordstown, Ohio, (even though the issues were more than a decade old).

Yet, Mr. Trump’s strategy is producing real results. In the most recent example, Fiat Chrysler will be returning to southeast Michigan. The company announced a $4.5 billion investment to convert the old Mack Avenue engine factory into a Jeep factory. This will reportedly lead to 5,000 new jobs in Detroit to help rebuild the shattered Motor City, and an additional 1,500 jobs in Macomb County.

It’s a rather interesting development, considering what’s happening just across the bridge in Windsor with the very same auto company.

How is Mr. Trump succeeding? He’s a strong, determined leader who takes tough stands and refuses to budge until he (mostly) gets his way. He substantially lowered the corporate tax rate from 35 percent to 21 percent in 2017, thereby creating a more business-friendly environment. He seems to use tariffs and trade wars as a short-term political tactic to achieve his long-term goals. His pro-America, pro-growth strategy, which some observers claimed was simply political chatter to win votes, has obviously resonated with Fiat Chrysler and encouraged the automaker to help rebuild the U.S. auto industry.

This helps to explain why Mr. Trump is driving North America’s auto industry with an air of confidence, while Mr. Trudeau remains confused and stuck in first gear.

• Michael Taube, a Troy Media syndicated columnist and political commentator, was a speechwriter for former Canadian prime minister Stephen Harper.


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