Month: July 2006

Ipsos-Reid, the polling firm, has exacted its pound of flesh from the national director of the Liberal Party. Fair enough.

But as someone whose last name is constantly misspelled or mispronounced (Attention Ryerson University professors : Mine is pronounced to rhyme with bacon but is spelled Akin), allow me to offer Ipsos-Reid a little advice: The National Director of the Liberal Party is Steven MacKinnon (right). Ipsos was crowing about a certain Steve McKinnon to whom Ipsos gives the title National Party Director.

Now, heaven knows, as someone who spent a decade-and-a-half as a print reporter, I have misspelled my fair share of people’s names. But, then again, I never sued anyone because they questioned my accuracy and then issued a press release about how I was always right: “The reputation of Ipsos Reid for the integrity of its work is of vital importance to its business,” said Peter A. Downard who acted for Ipsos Reid Corporation from the law firm of Fasken Martineau DuMoulin. 

 

From the 10th meeting of the Standing Committee on Industry, Science and Technology held June 8, 2006:

Canada may negotiate a free trade agreement with the Republic of South Korea. Bad idea, says Liberal Joe Fontana: “I think it's becoming increasingly clear that unless we get reciprocity or in fact the Koreans show they're prepared to open up the market, we shouldn't go any further until such time as it happens.”

 

From the 10th meeting of the Standing Committee on Industry, Science and Technology held June 8, 2006:

The automotive industry in Canada is mighty important, says the president of a group which represents Ford, Chrysler, and GM on the Hill:

Mr. Mark Nantais (Canadian Vehicle Manufacturers Association): We have roughly 570,000 jobs that are directly or indirectly related to the automotive industry in Canada. We are the largest manufacturing sector. We account for a trade surplus of roughly $6.5 billion of a $22 billion trade surplus with the United States. Certainly, when it comes to CVMA member companies, we procure about $40 billion from Canadian sources, which is roughly three times what the entire federal government purchases on an annual basis. As an industry, we represent roughly 11% or 12% of manufacturing GDP.

David Adams is the president of the group which represents foreign nameplates like Toyota and Honda. He agreed with much of what Nantais had to say but was at pains to point out to the committee that his members are net benefit to Canada and to the industry:

Mr. David Adams (Association of International Automobile Manufacturers of Canada): With respect to globalization, the automotive industry is perhaps the most global of all industries. Globalization is viewed as having a negative effect on Canada's automotive industry. However, the numbers do not necessarily bear this out.

    Capital investment in Canada has been fairly consistent at about $3 billion a year for each of the last seven years. Direct employment in the parts and assembly sector has been relatively stable at about 150,000 for the past five years. And the figure of 148,250 employed in 2005 is about 11% higher than the 133,181 employed in 1995. Vehicle production has been relatively stable at about 2.6 million units for the past five years, and Canada has held on to about a 16% share of North American production over that timeframe.

    Vehicle sales have been relatively stable as well at about 1.55 million units over the past five years. That is not to say there is not significant transition taking place in the industry and in the different sectors and manufacturers within the industry. The challenges currently facing the traditional North American manufacturers are well documented and likely to persist, at least for some time. Again, however, the health of much of the parts manufacturing community is pinned on General Motors, Ford, and to a lesser extent DaimlerChrysler, pushing through their current challenges.

….A more telling statistic is Canada's auto parts trade deficit with Japan. The deficit last year was about $1.7 billion, which is almost exactly the same as it was in 1996, despite the fact that automotive production from Japanese companies in Canada has increased 140%, from about 366,000 units to about 881,000 units last year. It is clear, then, that a lot more parts sourcing is being conducted by these companies in Canada and the United States.

 

Notes from a meeting held June 14 of the Standing Committee on International Trade. The topic du jour was a proposed trade agreement with South Korea.

Chris Buckley is president of Local 222 of the Canadian Auto Workers union. Local 222 is the bargaining unit in Oshawa, Ont. where Buckley’s members work for General Motors at plants that have been recognized with top industry awards as being the best and most efficient plants in North America and among the best and most efficient in the world. GM, nonetheless, has plans to close one of those plants.

Mr. Chris Buckley: Why? How do we make sense of that irrational result? Only one thing can explain it, one-way flood of imported vehicles from offshore auto makers.

I’ve heard others explain it differently: When any one of GM, Ford, or Chrysler got into trouble over the last decade or so, it was usually because of unsustainably high labour costs in the U.S. The solution for these companies was to close down a U.S. plant and shift production to a lower-cost/higher productivity area. Canadian plants were often a lower cost/higher productivity area — particularly when our dollar was trading at low levels compared to the U.S. dollar. But the United States Auto Workers union (UAW) would insist in bargaining with any one of the Big Three that if car plants in Alabama or Chicago or New Jersey were to be closed, some of the pain had to be shared north of the border. And so, typically, you would see the GM announcement or Ford’s decision to close its relatively efficient truck plant in Oakville, Ont. be made at the same time GM or Ford would be closing plants in the U.S. In other words, these plant closures are more the result of bargaining politics than any real economic cause-and-effect. It drives the CAW nuts because there’s almost nothing it can do or say to change the corporation’s mind.

Buckley: Last year 130,000 Korean vehicles entered our market; we exported 400 vehicles into theirs. Those imports are significantly harming our industry at a moment when we need to be fighting as hard as we can to save Canadian jobs.

How are vehicle sales doing this year? GM’s car sales for the current calendar year are 108,952, down about 10 per cent compared to the same period last year. Toyota — number two in Canada when it comes to sales of cars in Canada  at 73,555 — is up nearly 10 per cent. GM’s light truck and van business is down 6.7 per cent for the year; Toyota’s is up 24.3 per cent.

Hyundai, the Korean car giant, actually had a better June than Chrysler, so far as car sales goes. Hyundai sold 4,893 cars in Canada in June compared to 3,638 Chrysler cars. So far this year, Hyundai has sold — and therefore imported — 23,539 cars in Canada. That’s a 12.3 per cent increase compared to the same period last year.

Chrysler — and the rest of the so-called Big Three — sell a ton more light trucks and vans than the offshore nameplates. GM, Ford, and Chrysler were one, two, and three in the country when it comes to truck sales, selling a combined 51,938 trucks. Hyundai’s truck sales (mostly an SUV it makes) were 1,908. Hyundai’s truck sales for the year are at 10,752, a 7.1 per cent year-over-year decline.

Jim Stanford, the CAW’s economist, followed Buckley’s presentation to CITT with his own:

Dr. Jim Stanford: … since the Korean financial crisis, the broader Asian financial crisis in 1997, they have turned to exports aggressively to promote their economic recovery, while keeping a very firm cap on imports, with a variety of techniques, including: macroeconomic policy levers; active management of the exchange rate-very different from how we do it in Canada; taxation policies to shift consumer spending away from imported products; and of course various non-tariff barriers.

Our exports to Korea today are smaller than they were in 1997, despite a decade of economic recovery in Korea. There is no evidence whatsoever that a free trade agreement on the NAFTA model will change that.

…our automotive exports to Korea, which were never big to start with, have fallen by over 90% since 1997. That is despite Korean tariff reduction. Korean tariffs were at 50% in the eighties. They reduced them to 20% later in the eighties, then to 8% in 1995, yet it has had no visible impact on our exports to Korea, and neither will a free trade agreement.

It isn’t just the unions who represent workers at Canadian auto plants (important note here: Workers at Toyota’s plants in Cambridge, Ont. and at Honda’s plants in Alliston, Ont. are not unionized) that are lobbying hard against free trade with Korea. GM, Ford, and Chrysler — represented by their industry association the Canadian Vehicle Manufacturers Association — doesn’t want a deal with Korea, either. Here is Mark Nantais, president of that group, in front of CITT after Stanford.

Mr. Mark Nantais: We have built our industry on free trade agreements. We believe in free trade, but that free trade must be also fair trade. Right now what we're seeing and the approach that the Canadian government has taken, we do not see any possibility of fair trade in this case. The flow is always in one direction. So we see a direct harm to Canada's auto industry. We have a $2.6 billion deficit in 2005 with Korea of which 67% or about $1.7 billion was purely automotive.

Helena Guergis, the parliamentary secretary for International Trade Minister David Emerson, is a member of CITT and she noted, after these witnesses had finished, negotiations with Korea are still in an early stage. She also notes some Canadian companies are in Korea now:

Ms. Helena Guergis: We've got parts maker Lenamar in Guelph who now has an assembly plant there. At least one member of the Forest Products Association of Canada already has a joint venture in Korea and they believe this proposed free trade agreement offers an opportunity to ensure the best protection for Canadian investment in Korea. I also met with a separate forestry stakeholder yesterday who has a plant in Korea and they raised the same benefit of the potential FTA. Potato growers are also looking to get into the Far East markets and there is a huge market for potatoes there, but there seems to be a lot of barriers that include tariffs and red tape. s

On May 15, aides to Finance Minister Jim Flaherty prepared his “House Card” on “Frozen Terrorist Assets in Canada”. “House Cards” are the notes prepared for cabinet members in anticipation of the minister having to answer something during the daily Question Period in the House of Commons or answer a question from a journalist:

Here’s the highlight of a “House Card” titled “Frozen Terrorist Assets in Canada”

• ISSUE: Is there an update on the numbers of frozen assets in Canada?
• KEY POINTS: As of May 15, 2006 there is approximately $186,300 frozen in 10 accounts in Canadian financial institutions.
• The previous update of March 2006 on frozen terrorist assets showd $186,000 frozen in 8 accounts.
• The fluctuation in the amount is due to re-application of foreign exchange rates.