Canadian Ford Plant Revival Put On Hold

The Canadian auto industry has been suffering setbacks for months and months.  Thousands of Canadians working in the industry have been sacked as American automakers continue to shut down assembly facilities as part of their turnaround plans.  Recently, the Canadian auto industry received yet another blow when Federal Finance Minister Jim Flaherty flat out denied that Ottawa will give subsidy to a Ford manufacturing plant in Essex.

With that, the future of the Ford Essex engine manufacturing facility depends on the outcome of a political war. The provincial government headed by Liberals is more than ready to give subsidy for the engine plant to reopen.  The Conservative federal government on the other hand insists that instead of giving subsidy - they should just offer broad tax cuts.  In the end, the losers will be those who are waiting to work at the engine plant.

For more than three decades, the Dearborn automaker has manufactured its V8 and V6 engines in the Essex compound.  During the factory's heyday, 2,000 people were employed.  But by the time it was shut down, only 500 workers were left.  The reason for the shutting down of the plant is the misfortune of Ford in the United States auto market.  With more consumers preferring smaller vehicles over large vehicles which Ford specializes in, sales have dropped and the automaker forced to close down plants.

According to reports, if the engine plant is to be reopened, it would cost around $300 million.  With that amount spent on the rehabilitation of the plant, it is expected that initially, the engine plant will hire about 300 workers.  This plan and expectations though seems to be in jeopardy.

"Once again we have (Premier) Dalton McGuinty running a government with the highest taxes on business investment in Canada, and taxing all businesses, as I say, at the highest rate and then selecting which businesses, which corporations, he wants to subsidize," said Flaherty during his statement Thursday.  "That is certainly not our approach federally."

Ontario Finance Minister Dwight Duncan responded to Flaherty's statement saying that the minister is "rejecting further discussion based on an ideological opposition to something that virtually every government that wants automotive investment does".  According to Duncan who had worked in the engine plant," with a relatively modest investment by both governments, it would mean probably a very quick payback in terms of taxes".

Canadian Auto Workers union's economist Jim Stanford outlined the part that governments have to play in different industries.  "The history of our auto industry - and indeed the global auto industry, and indeed other high-value, high-tech industries like aerospace and pharmaceuticals or telecommunications equipment - is absolutely clear," he said.  "If the government doesn't play an active role, those industries don't exist in your jurisdiction."

If Flaherty's statement is any indication of how the government is going to support the Canadian auto industry, it would appear that several manufacturing facilities like those producing brake drum Canada would have to look for support somewhere else.