this post was submitted on 16 Feb 2025
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Tariff threats are already driving investment out of Canada (www.cbc.ca)
submitted 1 week ago by [email protected] to c/canada
37 comments fedilink hide all child comments
 

"Whether or not they ever be put into place, the damage is done," said Greig Mordue, a former auto industry executive and associate professor at the W. Booth School of Engineering Practice and Technology at McMaster University.

He says Trump's threats have already changed the landscape. Whether he goes ahead with the tariffs or not, or whether he carves out specific exemptions, the threat alone will drive investment out of Canada and into the U.S.

"For at least the next four years, there will be no serious investment in the Canadian automotive industry," said Mordue.

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[–] ragepaw 4 points 1 week ago* (last edited 1 week ago) (9 children)

I keep seeing this talking point. Is it true?

Consider that Australia has a similar population, similar geographic issues and they have domestic auto production.

South Korea is only slightly larger than us in terms of population and has 3 domestic companies building cars. We could certainly do like Korea and export vehicles.

The only thing stopping us from having a Canadian domestic auto industry is the pervasive and false belief that we can't because we need to sell to the US.

We don't. We can sell to anyone willing to buy.

Edit: To add. My first new car was built by an independent plant that manufactured for multiple car companies.

[–] GrindingGears 1 points 1 week ago* (last edited 1 week ago) (8 children)

Australia had automotive production. They don't anymore, because it wasn't viable.

South Korea is definitely an exporter of automobiles. Thing is it took them about ~40 years to get to the point where they caught traction with it. The early Korean exports were pretty low quality and sort of unreliable (different people had different experiences). It took time for their R&D to work it out, and for economies of scale to develop.

It's not the belief that we need to sell to the United States that would be stopping us here. It's that they are right next door + 100 years ahead of us on R&D and progress, not to mention having long established integrated facilities and economies of scale. You'd have to enter the global marketplace with a car company built from scratch, that would need billions if not even maybe hundreds of billions dumped into R&D, design & development, which takes time. You would need manufacturing facilities that would be huge, that would also probably cost tens if not hundreds of billions to develop. Where is your steel going to come from? How are you going to stamp it? Where's all the parts coming from if you don't want to work with the US, and then how are you going to get them on a timely basis if they are coming by ship? Not to mention the zillion other questions one would need to figure out. It would take ~a decade to get this all sorted out. And godless sums of money. All to then compete in a global marketplace with international companies that have centuries of experience.

Magna would be the only developed enough option where this could even be feasible, but even they've sort of poked around looking at developing a product in the past, and the absence of said product in the marketplace kind of tells you everything you need to know about the viability of it.

[–] [email protected] 2 points 1 week ago* (last edited 1 week ago) (2 children)

According to the wiki they still have a plant, but yeah, it shrank over the decades. Then again, other Aussie industries expanded to take it's place.

We're not trying to build this from scratch, and we only need to guarantee continued operation for the near future, not forever. I don't think it's a totally straight comparison.

It’s that they are right next door + 100 years ahead of us on R&D and progress, not to mention having long established integrated facilities and economies of scale.

Both of those things are equally in Canada, and I'm surprised you don't know that given the current news cycle.

Where is your steel going to come from?

We're a big net exporter of that, too!

and the absence of said product in the marketplace kind of tells you everything you need to know about the viability of it.

That's because crossing the border has been free and was assumed to always be free, so it's integrated with the US. American cars are Canadian cars, basically. Now that's changed, and the market (and politics) will have to adapt.

Organising a new company would be a huge problem, and selling overseas even bigger, but we have all the pieces on the production end.

[–] GrindingGears 1 points 1 week ago (1 children)

No doubt we have a lot of production capabilities, and you are right, I'm sure you could piece most of the rest together. The marketplace is the biggest conundrum, I would propose. All those manufacturing facilities are in SW Ontario, so the only way to get them to other markets (which is going to be necessary here, because the Canadian marketplace isn't big enough), it is going to involve ocean liners. Which is feasible, but your margins are going to get cooked here. There's too much risk.

This ain't the industry Canada needs to double down on, in a suddenly protectionist world. It's natural resources, and maybe service related. And hopefully all sorts of other industries that we aren't even thinking about.

[–] [email protected] 1 points 1 week ago

Yes, in the long term it might make more sense to just let Europe, South Korea and Japan take the lead. Or a poor country - hopefully a democratic one; I trust China only slightly more than the US right now.

The reason intervention would make sense is just to make the transition tolerably gradual. Right now we're talking about production lines and parts companies just sitting and rotting for (sudden, artificial) lack of customers, while Canadian consumers have trouble buying new cars at the same time.

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