Federal government aware of border issues involved in auto industry's restart
Wednesday, May 6, 2020
The Windsor Star/Dave Waddell
With North American automakers aiming to restart production this month, Minister of Economic Development Melanie Joly confirmed the federal government is holding discussions with industry, labour and U.S. government officials on how to revive a sector with such far-reaching tentacles.
The automotive supply chain stretches across three countries and will be making an unprecedented cold start requiring complex planning to coordinate the timing.
“We have maintained a good relationship with the U.S. administration, including many key governors (such as) the Michigan governor (Gretchen Whitmer),” said Joly in a phone interview Tuesday. “We will be working with them bit by bit restarting the economy.”
FCA CEO Mike Manley confirmed in a statement Tuesday the company plans to restart its North American operations, including Windsor Assembly, the week of May 18.
Ford Motor Company and auto suppliers, such as Magna International, are also pressing Michigan Governor Whitmer to relax the state’s emergency order allowing for much of the North American industry to reopen.
Ford has two engine plants in Windsor that supply power plants for the company’s popular truck series.
“Windsor-Essex is a huge manufacturing hub,” said Joly, who added ensuring workers have all the essential PPE required will be part of the equation in the auto industry’s restart.
“What I’m hearing is how can we protect the supply chain? We have to make sure we work with the U.S. and we have access to the Detroit region.”
In addition to the billions of dollars worth of parts and vehicles that will flow across the border, a number of the Windsor region’s automation and robotics companies will be needed for the reboot in the U.S.
With U.S. border restricted, there’s a question whether the Canadian technicians the Michigan plants need will be allowed to cross into Detroit.
“We will work with the auto sector and the unions to make sure we address that issue,” said Joly acknowledging the government was aware of the problem.
With the automotive industry and its supply chain having sat idle since late March, the account receivables of firms are drying up.
With no new payments for services rendered expected for 30 to 60 days or longer after the restart, companies have expressed concerns about not having the cash flow to grease the wheels of industry.
“For businesses who don’t have access to banks for funding, FedDev will be there,” Joly said. “The local MP Irek (Kusmierczyk) has been at the front identifying gaps. We’ve worked to see what we can do through FedDev (Ontario) in the region.
“I’ll be coming up with the details of the FedDev funding in about 10 days. That’s something we’ve been working on.”
For medium and larger sized firms, Joly said the government is looking at a number of different scenarios to help get them through the restart period.
Joly said the government opted to focus on implementing cash flow supports for smaller businesses first as their needs were the greatest.
“They (automotive industry) have been having conversations with many of us, unions as well,” Joly said. “More than ever people are having conversations.”
Joly added the first payments from the wage subsidy program will land in bank accounts May 7 helping to ease some of those cash flow problems.
The Canada Emergency Wage Subsidy program, along with the loosening of Employment Insurance qualifications, are two of the most popular government programs being used by automotive firms, according to a Canadian Association of Mold Makers/Automate Canada survey.
While manufacturing, deemed an essential service, will be one of the first economic sectors to resume production, non-essential businesses face a more controlled return to activity.
“We see it in a three-phase manner,” Joly said.
“The first one is stabilizing the economy and we’re still in that mode because we’re still identifying gaps.”
The second phase is restarting the economy with the final phase being recovery and rebuilding.
“We’re not there yet,” Joly said. “That’s why were being very prudent and are making sure the reasons to push forward for people and business make sense.”