Shock report: many people work in the auto industry

by Andrew Coyne on Tuesday, December 16, 2008 1:34pm - 89 Comments

121608_coynecars

This is just beyond bogus….

Canada would lose more than a half-million jobs if the Detroit Three auto makers went out of business, according to a new report released today.

The Ontario Manufacturing Council said the impact of a complete shutdown of the Detroit-based companies would spread through part suppliers and dealerships and into communities across the province. The council is an arms-length agency established by the Ontario government.

The “council” is not an “arms-length agency,” for starters: it’s a front group of special pleaders, set up by the Ontario Ministry of Economic Development to provide cover for the McGuinty government’s industrial policy ambitions (or, in govspeak, “manufacturing stakeholders who will examine the sector’s long-term needs and recommend to government, strategic approaches on sustaining growth and increasing global competitiveness.”) The vice-chairs are the president of the Canadian Manufacturers and Exporters association and the chief economist of … wait for it … the Canadian Auto Workers.

The report, with its shock-horror estimate of 582,000 jobs lost, is founded on two premises, both of them utterly absurd. One, that all three of the Detroit-based auto manufacturers shut down all of their operations, not just in Canada, but worldwide (the study models “the impact of the Detroit Three automakers ceasing operations globally.”)

Two, that none of the other manufacturers increase production to take up the slack (“foreign vehicle manufacturers in Canada are assumed to maintain production.”)

It’s on the basis of these two extravagantly unrealistic assumptions that the minister is able to talk about “the demise of auto in Canada” or “the extinction of the auto industry” as “the economic equivalent of a nuclear freeze.”

Well, yes. If you dropped a nuclear bomb on Detroit and Windsor, it would cost a lot of jobs. But no one is proposing to do anything of the kind. What is being discussed is bankruptcy, not vaporization. The plants don’t disappear; they don’t even shut down, for the most part. The companies go on producing, albeit at lower volumes. But that’s what would happen in any event, because people are buying fewer cars.

But they’re still buying some cars. That’s the other part of this “study” that’s hard to take. Detroit sold something like 18 million cars worldwide last year. Even with a 20% decline in sales, that’s still 14 or 15 million willing purchasers of automobiles that, under the study’s assumptions, would apparently have to walk, owing to the other manufacturers’ inexplicable failure to ramp up production — or buy up Detroit’s unused capacity — to meet the demand.

It would have taken five minutes for somebody in the media to see through this obvious con job. Yet in every story I saw, the 582,000 number was reported straight, just as if it actually meant something. Go figure.

UPDATE: 300,000 JOBS “AT RISK” IN FORESTRY SECTOR

Trees will go unfelled, wood will cease use, unless forestry companies get $600 mil.

PAC’s members employ about 300,000 people and account for 12 per cent of Canada’s manufacturing activity, more than the auto and banking industries combined.

That is, until lumber became extinct…

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  • TobyornotToby

    The forest industry is a completely different situation than the automotive sector. It isn’t in trouble in the U.S. the problem is that American owned companies have for decades loaded all the costs on their Canadian fibre supply operations and derived the profit from their finishing mills state side. They’ve been selling to themselves and revinesting the profits, not in the pulp mills in Canada, not in the forests in Canada, but in high efficiency mills and plantations closer to their end markets in the U.S. We’ve been subsidizing this process with low stumpage fees, and now that they don’t really need our trees all that much, we’d be paying them to take jobs away.

    Any “bailout” should be for the single industry communities that are dependent on forest products companies that close, not for the companies themselves. And governments everywhere should take a page out of Danny Williams’ book by reclaiming any forest rights and reallocating them to viable producers that remain. If you want to do something for the forest sector, consider financing for smaller operations and locally-owned start-ups so they can use the forest and create some local employment in communities that will otherwise experience 80% unemployment, and a complete crash in housing values, followed by the forced emigration to urban areas of almost all of the adults under 50.

  • Brad Sallows

    >Apart from simple competence, I do think a lot of reporters are reluctant to challenge assertions in studies they’re asked to cover, because (a) contesting an assertion might be regarded by somebody, somewhere as bias; and (b) many reporters don’t like to appear as independent authorities in their own stories.

    That’s unfortunate. The public interest (in journalism as a profession) could certainly stand to have many more “beat” reporters who cover subjects about which they are knowledgeable – not experts, but sufficiently savvy and self-confident to assess whether a “fact” is at least of the correct order of magnitude, and to point out who is truly a non-partisan expert and who is not.

    The downside of being unwilling or insufficiently grounded to challenge the PR flacks is that one’s bias doesn’t vanish: some reporters just become cheerleaders.

  • http://carnewsandviews.com jwl

    McGuinty is now using this report to say that $3 billion payout that’s already been proposed is just the first in what could be many payments. The car companies, and McGuinty, are going to get our money by hook or by crook it seems.

  • Jan Simpson

    Simply splendid! It is too this doesn’t come with a flow chart to show the effects of one industry that has caused so much abuse, wasted time and money, couldn’t get rid of the unions to bring down the prices, couldn’t design their way out of a wet paper bag and look how many businesses would be effected. Well I guess what I would have to say, if MacDonalds put the restaurant on the corner to serve the masses of plant – well they should have had a bad up plan for the downfall of customers should something happen to the plant or the industry.

    Actually, MacDonalds is doing extremely well as a QSR (quick service restaurant). In fact QSRs are the only group of the restaurants that making a profits – so don’t cry for MacDonald’s – we still feed our kids junk food instead of having a family meal. ’nuff said on that subject.

    It is sad that people are losing their jobs and it is sad that we, as Americans, have put our heads in the sand and just let whatever will be will be, including the Madoff situation (and that is not the only crook in the world who has stolen money) get away with stealing and then cry bloody murder when we are down and out – shame on us.

    So, the Auto industry, if they ask for my money, which they are – should have oversight by me and everyone else and all the leaders from directors and above should be fired and start over. If the factories need to be re-tooled – then re-tool them. Sounds like the argument the dry cleaners give women for over charging them for blouses and shirts (our machines are made for men’s shirts only so we charge them .99 cents and we charge you for the same material shirt 5.00). Let’s get on with life instead of crying and whinning -

    Nice post – keep up the good work – and all studies are bogus, true and somewhat slanted – but all facts are bogus, true and somewhat slanted, the truth lies with the receiver, not the giver.

  • Sisyphus
  • http://www.wwwdotcom.com Wes

    Sisyphus:
    HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

  • Francien Verhoeven

    kody,

    yes, reporters creating news is something to be very careful about. I’m not sure how the young generation will be able to distinguish between news reporting and opinion making, for it seems that the line between the two gets more and more blurred. Will the young generation be presented with an opportunity to experience the difference? I don’t know.

    Coming back briefly to editorials on Harper’s interview on ATV. The ATV interviewer was trying hard to have Harper express his regret about what was contained within the FU. The interviewer pushed very hard, but Harper would not spit out the words being put into his mouth. Then in today’s G&M editorial, tried to force feed Harper once more.

    But Harper should never apologize for what he had put into the FU, most noteworthy the subsidy cut to political parties. Subsidies to political parties form as much an obstacle to our economic well-being as does any other program. Subsidizing a separarist party will ensure many minority governments to come. This is not solely a Conservative party problem but is a problem for all federal parties participating within federal elections.

    It is very strange how so many supporters of the coalition seem to think that the threat to Canadian unity hinges around the fact that the BQ might ask the coalitoin government to re-open Quebec unity issues (language, for instance, or unity issue related demands).

    But that is not why the participation of the BQ within the coalition poses such a danger to our federation. By including the BQ within a proposed coalition, the BQ has in essence achieved the presentation of a two-nation federation. To undo that slide-in will amount to much more mayhem than we have seen over the past few weeks. Harper was pre-warning us about what could be set into motion, and for such honest warnings, he should never have to apologize to anyone. In fact, I would be extremely disappointed if he would apologize for having expressed such forsight.

  • Grass Roots

    No one wants to buy Domestic including the CAW:

    OSHAWA — In the old days, this shopping mall parking lot would have looked like a virtual GM dealership, with most of the spots filled with domestically built cars or their American cousins.

    Not any more. Instead, there seem to be as many Asian and German imports prowling for non-existent parking as there are vehicles built by GM, Chrysler or Ford.

    If even people in Canada’s motor city aren’t supporting the company that employs thousands here, no wonder the Big 3 automakers are perilously close to the wrecking yard.

    But how far should auto patriotism go when they’re churning out cars and trucks people don’t want to buy?

    Toronto Sun article

  • http://ragingranter.blogspot.com Raging Ranter

    Moe Uniting, that’s brilliant. The Mosquito Bomber was made out of wood, and it played a HUGE role in winning WWII. Maybe the answer to our future is in the past.

    Imagine, cars made out of wood, powered by wood. Rolling along on wooden wheels, on a highway made out of…. WOOD!!

    Seriously though, does anyone find it odd that government would actually subsidize companies so they could keep cutting down more trees? I’m not a tree-hugger or anything, but really – paying companies to cut more trees? Because cutting them down isn’t profitable on its own? Is that not just slightly perverse?

  • Two Yen

    Francien makes a very good point. The participation of the Bloc in the coalition did pose a significant challenge to the federal government. This had nothing to do with the Bloc’s promise to vote with the coalition. The Bloc had also supported the Conservative government from time to time in the last Parliament. This was no big deal.
    What was differennt ths time was the formal consultative mechanism for the Bloc. In essence a party representing only one province was to be given a veto over policy development. This distorts the principles of our federation and had the potential to undermine the smooth working of the federation. No PM should have accepted that concept. S Dion was a power hungry man, willing to subvert his long standing federalist principles merely for a chance to seize power. Thank God Stephen Harper stood up to him.
    Two Yen, formerly known as Two Cents

  • Francien Verhoeven

    Yes, Two Cents (do I know you formerly, or what!)

    Harper has said so himself: he is not against the formations of coalitions within our parliamentary system. He in fact does not consider the idea to be anti-democratic. But Harper is against ligitimizing the presence of a separatist/provincial party within our federal house by asking them to be formal partners.

    Had the LPC and the NDP proposed an opposition without formal inclusion of the BQ, Harper might not have asked for the house to be prorogued. The cool-off period was needed to come to an understanding of what actually had occurred.

    I find it striking that LPC and the NDP had been so eager, had been so willing to sign up an agreement with the BQ. The formal agreement does tell but half of the story; the speed at which this happened was truly historical, for it seems as if the LPC and the NDP had put no question marks beside the inclusion of a separatist party at all. It had not been given much thought at all! That is truly an historic marker for Canadian politics, and for the BQ as well, I must add.

  • mynalee johnstone

    $25 Billion is what The big 3 spent just on advertising.

    $393 Billion is what the US governments spend on support for the uses of automobiles. Go figure,hey!
    Fatalities from road accidents: 47,000 Americans a year.

  • http://www.johnwaugh.blogspot.com John W

    If the big 3 all go under, the foreign auto producers will have no reason to keep their North American plants operating. They will gradually move fabrication and, perhaps more easily, their parts manufacturing back to their home countries. Opening plants in North America was done to make consumers fell less guilty and more likely to buy so called imports. It worked. But not necessary if the big 3 go down. People are really pretty naive about these guys (Toyota, Honda, VW etc).

  • http://www.van-sales.org van sale

    As of September, 2008 the Detroit Three employed 239,341 hourly and salary workers in the United States at the end of 2007.

From Macleans