Support for Auto Industry Reinforces Canadian Economy during Crisis, Says CAW President
June 1, 2009, 2:43 PM EST
CAW President Ken Lewenza said the support provided to General Motors by the federal and provincial governments is critical to the long-term health of the Canadian economy.
Lewenza stressed that the governments' support for the GM and Chrysler restructuring efforts will save hundreds of thousands of jobs in total, above and beyond the direct positions at the two automakers. "For every direct job saved through this process, a total of 7.5 jobs depend on the auto industry's continuing presence in Canada," Lewenza said. "Hundreds of other companies, from auto parts suppliers to neighbourhood cafes and dry-cleaners, would face a grim future if GM and Chrysler were to disappear from Canada."
"This is not just about saving direct auto jobs. It's about reinforcing the foundation of our whole provincial economy," said Lewenza.
Part of the criteria for government support is that General Motors maintain its manufacturing footprint and increase research and development in Canada, said Lewenza. "These requirements will help not only preserve Canadian jobs, but create a stronger, greener and more successful industry for the future."
That General Motors managed to avoid filing for bankruptcy protection here in Canada is a credit to the tremendous hard work on both sides that went into reaching a new collective agreement between the CAW and the company.
"The union was proactive in responding to demands put on us by government, and although the sacrifices made by our members were difficult, we all understand that this government support was instrumental in maintaining the industry and the hundreds of thousands of jobs it provides," said Lewenza. He also indicated the importance of avoiding bankruptcy protection should not be underestimated.
Lewenza also pointed out that the restructuring assistance could ultimately impose no cost whatsoever on Canadian governments or taxpayers, once the companies stabilize, auto sales recover, and the loans and other forms of support are repaid. The Canadian government's support for Chrysler's earlier restructuring (in 1979) did not cost Canadian governments a single dollar - yet were important in preserving the company's substantial Canadian operations for a generation to come.
"The fiscal cost to governments of doing nothing, and allowing these companies to disappear from Canada, would be far, far worse than supporting their restructuring and continued operation here," Lewenza said. He pointed to economics studies (such as a recent report from the Centre for Spatial Economics) estimating the federal and Ontario governments would lose $13 billion per year if the Detroit Three automakers ceased operations in Canada.
"All those so-called taxpayer rights' advocates should think carefully about how government would replace those many billions of dollars in lost revenue, if GM and Chrysler disappeared from this country. That's what taxpayers should fear, not this restructuring package."