Tuesday, June 03, 2008

Auto Industry Disaster: The Harper Government's Betrayal of Ontario

From its first day in office in February 2006, the Harper government's top priority has been to promote the rapid expansion of the export of Alberta oil to the United States.

The negative consequences of this thoughtless policy have been myriad. Vast quantities of clean natural gas and precious water have been used to produce synthetic crude oil at the cost of reducing a huge stretch of northern Alberta to a fetid dump, unfit for wildlife or human habitation. The Harperites have enriched their pals in Calgary's oil patch with record profits and they have poured huge sums into the pockets of the owners of the foreign owned oil giants.

The prime minister likes to brag that under his watch Canada has become a global energy power. So what if one consequence has been to render Canada incapable of halting the increase in its greenhouse gas emissions.

Another consequence has been to cut Ontario's manufacturing sector to the bone. The rapid rise in the value of the Canadian dollar in relation to the U.S. dollar has delivered a blow to manufacturing from which it may never recover. And the rise of the Canadian dollar has been directly tied to petroleum exports.

The Harper government has received repeated warnings over the past two years to moderate the pace of petroleum exports so that other sectors of the economy from tourism to book publishing to manufacturing can have the time they need to adapt to a rising dollar.

Today, the disaster came home to us with the announcement by General Motors that it will close its Oshawa truck plant next year throwing 2600 workers out of a job. GM CEO Rick Wagoner said it was unlikely the plant would ever reopen.

Appropriately CAW President Buzz Hargrove took aim at the General Motors management for signing a deal with the union a couple of weeks ago whose essence was to keep jobs in Canadian plants in return for huge monetary concessions from the workers. The CAW will fight the battle against the pusillanimous bad faith bargaining of the company.

The rest of us need to focus on the calamity the Harper government has created in our most important manufacturing industry. If the dollar had not been so high against the U.S. greenback, it is highly likely that GM would have planned for much more future investment and economic activity in its Canadian plants to produce the new hybrid vehicles, electric cars, smaller cars and crossover vehicles on which its future depends.

Instead, we've been shafted by the Harper government and by the GM management.

Not least to blame is Finance Minister Jim Flaherty, the MP for Whitby-Oshawa, who has been openly saying he can see little reason why companies should invest in Ontario. Thanks Jim. I'm sure a lot of families in your constituency are singing your praises over dinner tonight.

Flaherty has been bone headed in his insistence that only corporate tax cuts can save jobs in Ontario. You would have thought that a minister from Oshawa would have seen the growing menace of the rising dollar and would have pushed for a shift in economic policy to slow the pace of petroleum exports, protect the environment, and give the manufacturing sector some much needed breathing room.

Given the economic restructuring that is now going on, Canadians cannot afford to have a federal government that is fixated on profits in the oil patch as the source of a rising TSX, no matter what that means for working Canadians and the well being of most of the regions of Canada.


Richard Sharp said...

You connect the dots like none other. Yours should be self-evident truths, but you won't find it in the MSM.

Because the corporate media don't want to talk about the down-side of their greed and complicity in the de-industrialization of Canada.

The oil patch bonanza out west is in fact a joke. Compare our royalties to, say, Norway (or Saudi Arabia or Venezuela). We're (Alberta is) getting diddly-squat and wrecking the environment to boot.

This is gross economic mismanagement. And I am not surprised in the least.

Anonymous said...

Thanks. We've been deluged with a blizzard of neocon and neolib blather about the inevitability of the deindustrialisation of Ontario and the supposed irrational response of the CAW to the padlocking of the Oshawa plant.
But even neocons admit that if commodity prices swoon and we lose our privileged position as a commodity supplier, things could turn around very quickly and we will regret losing those jobs.
Maybe what we need is to have the commodity price bubble burst.