American Auto Crisis Would Reach Far Beyond the Northern Border

(Detroit Free Press – Jason Myers and Richard Blouse)

Jayson Myers is president of the Canadian Manufactures & Exporters Association and vice-chair of the Ontario Manufacturing Council and Richard Blouse is president and CEO of the Detroit Regional Chamber.

A lot of ink, air time and space on the Web have been dedicated to discussing the economic fallout that would be felt throughout the U.S. if one or more of the American auto companies failed. The cascading effect through the entire U.S. economy would be devastating at a time when an already weak economy could not afford another blow.

What is not as widely known is the negative impact that would be felt in Canada. The Ontario Manufacturing Council recently commissioned a study – similar to one completed by the American Center for Automotive Research on the impact in this country – to get a better idea of what the failure of American carmakers would mean to Canada. The Canadian losses could quickly reach a million jobs under a worse-case scenario.

The studies are clear evidence of the fact that the U.S. and Canadian economies are inextricably connected. Our two nations are each other’s largest trading partners. The auto industry is a big part of this equation.

Last year, the U.S. purchased $53 billion in automotive goods from Canada. Canada was, in turn, the customer for $50 billion worth of automotive products from U.S. manufacturers. Vehicles and parts flow seamlessly across the Northern Border in an integrated supply chain because the American and Canadian auto industries operate as one. And in many ways, they are integrated into a much larger global economy.

The magnitude of job losses in Canada would further undermine many other sectors of the U.S. economy that depend on exports to America’s largest trading partner, just as the struggling American auto companies are affecting the Canadian economy. This is a vicious cycle that only hurts both nations.

We commend the Bush administration for providing $13.4 billion in immediate federal loans as an interim plan to give the American automakers time to restructure. The Canadian government is to be applauded too for committing $2.8 billion in credit to the industry. We stand ready to support the auto companies as they develop plans for long-term viability, which is in the best interests of both nations.