QUESTION 2

A.      AssessCanada’s global competitiveness in the auto industry.

In order to assessCanada’s global competitiveness in the auto industry, it is important to identify which of three frameworks for measuring competitiveness are used: (1) factor model; (2) trade performance assessment; or, (3) cost-based productivity assessment (Barrows & Costomitis, 2001a). Barrows and Costomitis (2001a) use all three models to provide a comprehensive assessment ofCanada’s position respective to other industrialized and developed nations. Using the factor model, Barrows and Costomitis (2001a) reported that whileCanadahas performed relatively well in overall rankings, it is generally seen as having a mix of impressive strengths and crippling weaknesses. Among the latter, Barrows and Costomitis (2001a) citeCanada’s under-utilization of certain technologies and its failure to internationalize sufficiently. The example offered by Barrows and Costomitis (2001a) to substantiate this claim is that while Canada appears to export a significant number of autos to the United States, the autos that are produced in Canada and then sent to the U.S. “are not really exports, but the movement of a final product as part of an integrated North American production system” (p. 9). In this sense, then,Canadais not competitive; it is cooperative.

Barrows and Costomitis (2001a) arrive at a similar conclusion when examining competitiveness from the trade performance perspective. They contend thatCanadahas focused more on the “highly protected domestic market” rather than “aggressively pursuing export markets” (p. 13). As a result,Canadais not as competitive in the automobile industry as the moreUnited StatesandJapanare, with the latter being particularly well-known for its risk-taking commercial strategies (Hooven, ). Finally, using the cost-based productivity framework, Barrows and Costomitis (2001a) find additional support for their argument thatCanadais not as competitive as it could and should be in the automobile industry. The authors conclude that whileCanadahas enormous potential to secure a higher and more dominant position in the auto industry, it has not yet evolved to the extent that it can fully realize this potential. This is a view supported by many other researchers and academics (Crispo,  ).

B.      What are the current threats facing the auto industry inCanada?

At present, there are three primary threats facingCanada’s auto industry (Barrows & Costomitis, 2001a). First,Canadahas tied up its product and its performance in a relationship with theUnited Statesin such a way that the possibility of forging other trade and commerce partnerships is limited. Various trade agreements, including GATT and NAFTA, have been the impetus for such a symbiotic relationship (Jurkowski,  ). In fact, many corporations operating inCanadaareU.S.owned (Gillies, ; Wesson, 2001).Canada, then, is almost wholly dependent upon both the product and performance of theU.S.auto market (Barrows & Costomitis, 2001a). Barrows and Costomitis (2001a) also identify another threat, which is not necessarily specific to the auto industry, but which affects it profoundly, and that threat is the failure of Canada to invest money into its own research and development (R&D) processes. Instead,Canadarelies upon research and innovation to come from its partners—namely, theUnited States—and it then executes the plans that result from those external R&D processes. Barrows and Costomitis (2001a) insinuate that untilCanadabegins to centralize some of these processes within the country, it will not enjoy a more prominent and competitive position in the world auto industry. The third threat that currently facesCanada’s auto industry is that its role as a supplier of auto parts to theUnited Statesis being compromised by those countries that can offer more competitive prices to American automakers. The challenge forCanada, then, is to determine how it can continue to pay its workers fair wages while producing a low-cost product that has a competitive price-point compared to that of other countries.

C.      What competitive advantages does the auto industry inCanada possess?

The auto industry in Canadapossesses the competitive advantages of being located within a larger national context of relative economic stability. Trade tariffs have been reduced significantly in recent years, increasing Canada’s competitive abilities in the auto industry and in other markets (Barrows & Costomitis, 2001a). Also, while its relationship with the United Stateshas been described as a limitation to the extent that it prevents Canadafrom developing independently, it is, at the same time, one of its advantages in competing with other countries, especially Japan. The geographic proximity of Canadaand the United Statesfacilitates the production and commercial relationships between the two countries.

In recent years, Mexico, China, and other nations have begun eclipsing Canadain terms of its role as the leading parts supplier to United Statesautomobile manufacturers, a condition which has created ideological, political, and economic conflict among the various stakeholders affected by this consequence of globalization. While the government has promoted an innovative strategy for shifting the focus of its role in the auto industry from that of primary producer to that of provider of technical assistance, this change in approach has impacted auto workers whose primary skill set is production-based and who are left unemployed by these circumstances. At mid-career or later, the fate of Canadian auto workers is similar to the fate of other laborers whose industries have either been phased out or farmed out to other countries, among them textile workers and line production employees in a variety of industrial product assembly plants. For these reasons, many workers have banded together and either formed or joined special interest groups, which are used to influence local and national policies to take their needs into consideration (Stanbury & Moore,  ). Among these groups is the powerful Canadian Manufacturers and Exports group, formerly known as the Canadian Manufacturers’ Association. Canadian Manufacturers and Exports is Canada’s “largest trade and industry association,” not a union, representing various industrial sectors, including automobile, oil companies, aerospace, and technology workers, to name just a few (Canadian Manufacturers and Exports, 2007, para 1).

        As Stanbury and Moore (   ) point out, not all interest groups are the same in terms of organization, membership, purpose, or function. Nor are all interest groups the same with respect to whether their structures and membership are formal or informal. Canadian Manufacturers and Exports is a formal interest group that promotes itself as being “run by business, for your business” (Canadian Manufacturers and Exports, 2007, n.p.). Interested parties must join to become a member of Canadian Manufacturers and Exports, which has been in existence—though under various names—since 1877 (Canadian Manufacturers and Exports, 2007). Membership is offered to individuals and to corporations; current corporate members include Bauer Industries, Crown Metal Packaging, Johnson Mathey Limited, and Nortel (Canadian Manufacturers and Exports, 2007). This dual membership structure is clever, in that it allows individual stakeholders to align themselves with more powerful and more visible organizational entities, an effective influencing strategy.

While Canadian Manufacturers and Exports does not focus exclusively or even specifically on automobile manufacturers’ or workers’ issues, it might be more effective than interest groups with a more tightly defined focus in that Canadian Manufacturers and Exports represents a large industry bloc. As such, it can advocate and influence policy and practice in a wide variety of industrial sectors, including the auto industry. Canadian Manufacturer and Export has no fewer than 14 policy committees, whose members “advance their concerns to government officials, develop proactive policy positions for advocating changes to government policies and programs, and network with government officials and other business leaders” (Canadian Manufacturer and Export, 2007, n.p.). The committees include, for example, business and legislation, customs and market access, export finance and insurance, trade promotion, transportation, and trade policy; each of these committees seeks to gather information and opinion and use it to influence government policies and outcomes. The auto industry is well-represented among these committees; in fact, the Chair of the Business and Legislation Committee is an executive at Ford Motor Company (Canadian Manufacturer and Export, 2007).

Clearly, Canadian Manufacturer and Export (2007) is concerned about the threats and opportunities presented by globalization, among them the potential off-shoring of certain industries in an effort to reduce the bottom line of Canadian-based corporations. Rather than struggle against this trend, however, Canadian Manufacturer and Export has, perhaps paradoxically, embraced the challenge, much like the government itself has. Instead of fighting against current conditions, Canadian Manufacturer and Export is interested in seeing howCanadacan adapt, at low expenditures, to the situation, and it has been instrumental in shaping the government’s attitude towards alternative strategies, such as the technical assistance programs. Canadian Manufacturer and Export is a large interest group whose success lies in its diversified membership, its general, rather than industry-specific approach, and its willingness to pursue innovative solutions that accept current realities and work with them rather than deny that they exist.

References

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Canada and the New World Economic Order. (pp. 3- ).New York: Captus Press.

Barrows, D., & Costomitis, J.A. (2001b). International trade and investments. In T. Wesson, ed., 

Canada and the New World Economic Order. (pp.  ).New York: Captus Press.

Canadian Manufacturers and Exports. (2007). About us. Retrieved onFebruary 28, 2007from

        http://www.cme-mec.ca/national/template_na.asp?p=1.

 Crispo, J. (2001). Canada’s prospects. In T. Wesson, ed., Canada and the New World Economic 

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 Department of Industry Trade and Commerce. (1982). 1982 report of the auditor general of 

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        http://www.oag-bvg.gc.ca/domino/reports.nsf/html/8210ce.html.

Gillies, J.M. (2001). Globalization and Canadian economic and industrial strategy in the twenty-

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Hooven, E. (2001). The new world order in a new millennium. In T. Wesson, ed., 

Canada and the New World Economic Order. (pp.  ).New York: Captus Press.

Jarkowski, D. (  ). Federal government’s industrial strategy to regional economic disparities: An

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Stanbury, W.T., &Moore, S. (  ). Role of interest groups in influencing public policy inCanada.

Wesson, T. (2001). The sectoral structure of Canada’s economy. In T. Wesson, ed., Canada and 

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