Auto cuts create fears for Ontario economy
The fallout from Thursday's announcement by Chrysler that it is cutting 1,100 jobs at its Brampton, Ont., plant is expected to be felt throughout the Ontario economy.
Ontario NDP Leader Howard Hampton said the job losses will continue to spread through the auto sector.
"Some of the other job losses will be in [auto] parts, because the parts plants generally try to locate next to the assembly plants.So when the assembly plants go down, the parts follow.… It's generally five to one: you lose an assembly line job, you lose five more in direct and indirect [industries]," said Hampton.
Others say the spin-off job losses are even higher— seven, or 7½.
Ontario's economic development minister is also worried that the auto parts suppliers will start to cut jobs.
"My worry today is the ramification of this Chrysler announcement on the supply chain that feeds Chrysler, because you're going to see some more shakeups happening as a result of today's announcement.It worries me greatly," said Sandra Pupatello.
Pupatello said the province needs federal government help to attract more auto industry investment. But federal Industry Minister Jim Prentice said Thursday there's not much in terms of specific aid the Harper government can do right now for the auto industry.
Chrysler's decision to cut 12,000 jobs in North America and discontinue four models follows in the path of Ford and General Motors which are also reeling from slumping sales and stiff foreign competition.
CAW President Buzz Hargrove said Thursday that the auto industry is "on its knees."
According to Hargrove the high dollar and consumer taste shifting away from gas guzzlers are part of the reason. But the major cause of the downturn in the auto sector is imports from Asia.
Hargrove also says it's time for Ottawa to step in and do something.
"Put Japan on notice that we are no longer going to accept vehicles built in Japan into the Canadian market until such time they commit to buy in equal dollar value as much as they sell in our market.They can build here and sell here, no problem, but we have to put an end to the devastation created by the imports from those countries."
One worker arriving for the afternoon shift on Thursday also blamed the crisis in the industry on North American consumers' love affairs with foreign cars.
"No one's buying domestic.…Our country's not helping us out whatsoever, you know, letting all these foreign vehicles in when there's no consequences."
Louis Thériault of the Conference Board of Canada agrees, in part, but says the unions are ignoring another problem— the hold they have had on the Big Three automakers.
He says the strong auto unions have provided workers with excellent working conditions and benefits, "but that [creates] a competitive disadvantage for the Big Three."
In an economic assessment also on Thursday, the Conference Board said it expects Chrysler and other North American automakers to continue to lose money well into 2008.
The report said auto industry losses for 2007 would be about $550 million, but suggested the industry would do better next year.
Thériault said that a new Toyotaassembly plant in Woodstock, Ont., and restructuring by the Big Three automakers mean the industry would make a profit of $850 million in 2008.