LILLEY: Ontario’s auto industry needs Trudeau’s help in Washington

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On Wednesday, the first Chevy Silverado rolled off the re-opened Oshawa assembly plant. Last week, Markham’s mayor announced an expansion of a Tesla parts plant in that city.

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With the Ford government set to unveil the next phase of its auto-industry strategy over the coming weeks, things are looking up for Ontario’s vehicle manufacturers.

That optimism, though, is being tempered by clouds emanating from Washington, D.C., where U.S. President Joe Biden continues to back a budget bill that could have crippling effects on the sector.

Biden and the Democrats are supporting a bill that would provide a tax break worth US$12,500  to those who purchase an electric vehicle. To qualify for the credit, the car would have to be assembled in the United States with 50% American parts and a U.S.-made battery.

Industry watchers here know that could mean trouble for future plant expansion or even the continuation of existing plants. The tax break would be a strong motivating factor for carmakers to move production south.

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With Ontario in the running for a battery plant being built by Stellantis, the former Chrysler, even the threat of this move could sway decisions.

So far, the Trudeau government hasn’t been on top of this issue. Prime Minister Justin Trudeau failed to secure a meeting with Biden when they were both in Europe and ministers were slow to act on the file.

It’s the opposite of when Donald Trump was in the White House and the Trudeau government was fully engaged in an effort to combat protectionist moves by Trump. Since Biden was elected, Canada has been invisible in Washington.

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The glimmer of hope is a summit being called by Biden with Trudeau and Mexican President Andrés Manuel López Obrador. Trudeau will need to convince Obrador to work with him against Biden’s protectionist policies, but to be successful, they will need to find a way to give Biden a win.

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The American president is in a fight for his political life. His approval rating is below 40%, many of his allies lost in state and local elections last week, and the mid-terms — still a year away — are now the focus of the American political system.

“We need to offer a North American-made incentive,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. Volpe noted about 50% of the parts in Canadian- and Mexican-made cars are produced in America, and there are 750,000 U.S. workers employed in the parts sectors.

To sell that kind of message, we need to get back to the war footing Canada was on in pushing back against Trump, and in addition to Biden, win over members of Congress who will be voting on his budget bill.

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“Canada has to do a full-court press to articulate the value of economic integration,” said Scotty Greenwood, CEO of the Canadian-American Business Council.

That would mean having a steady stream of cabinet ministers in Washington, effectively pushing the file.

Trudeau’s industry minister, Francois-Philippe Champagne, visited Washington recently to make the rounds. He said he’s trying to find that win-win scenario, but also pressing the case that the deep integration of the North American auto industry is a good thing the Americans shouldn’t mess with.

  1. Ontario Premier Doug Ford attends a press briefing at the Queen's Park Legislature in Toronto on Friday, Oct. 15, 2021.

    LILLEY: U.S. budget legislation poses risk to Canadian auto sector

  2. Premier Doug Ford is pictured during a stop in Windsor on Oct. 18, 2021.

    Ford government pushes back against Biden’s protectionist stance on auto manufacturing

  3. U.S. President Joe Biden delivers remarks on the Delta variant and his administration's efforts to increase vaccinations, from the State Dining Room of the White House in Washington, D.C., Sept. 9, 2021.

    LILLEY: Biden has history of targeting Canada’s auto industry

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“I think on both sides, senators understand that if there’s a sector of our economy where the supply chain is very integrated, it’s the auto sector,” he said last week.

Champagne may be Trudeau’s secret weapon in this battle in the same way Chrystia Freeland was last time. He’s an affable man, politically astute without appearing to be plotting, and unlike many around the cabinet table, comes from a background in the private sector.

For Ontario to be able to move forward in growing the auto sector the way the Ford government wants, they need Trudeau and Champagne to succeed next week in Washington.

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