Someone Tell Trump: America Is The New Mexico (To Canada, Anyway)

November 12, 2015

Last month, Donald Trump ruffled feathers at Ford when he claimed that the automaker was cutting American jobs by shifting production to Mexico. Now, something similar is happening in Canada -- only this time, the cheap-labor boogeyman isn't Mexico, it's the U.S.

The problem in the Great White North is the lack of incentives for automakers. According to General Motors' Canadian division, that's encouraging car companies to invest more resources and create more jobs south of the Canadian border.

While Mexico and China remain the most popular bugaboos for many in the manufacturing sector, the U.S. has begun giving them a run for their money in the automotive sector. That's particularly true of the American South (including Texas), where automakers like Hyundai, Kia, Porsche, Mercedes-Benz, Volkswagen, and Nissan have already set up shop, and others like Toyota, BMW, and Aston Martin will soon move.  

That has GM's Canadian arm worried. This week, the division's president, Steve Carlisle, urged the newly elected Liberal government to replace the current system of federal loans that require repayment. Instead, he'd like to see a system of grants that encourage innovation and investment.

Whether Justin Trudeau & Co. will do so remains up for debate. During the recent election cycle, Conservatives were much more aggressive in wooing the auto industry, offering C$1 billion ($751 million) in support over the coming decade. Some of that money would've taken the form of grants.

But even that might not have been enough to keep jobs in Canada. Consider that the state of Tennessee doled out nearly two-thirds of that sum to just one automaker, Volkswagen. (Though given the ongoing Dieselgate scandal, Volkswagen may have to repay some of all of that dough.)

Canadian manufacturing woes aren't likely to let up anytime soon. Between now and 2020, automakers will reevaluate their contracts with the majority of Canada's car factories, and there's no guarantee that the car companies won't decide to shift production to other factories in other countries.

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