Unifor denounces EDC loan to Volkswagen

TORONTO, April 24, 2015 /CNW/ - Unifor leaders expressed shock and anger at news that Export Development Canada is lending Volkswagen $526 million to support the expansion of its assembly operations in Mexico.

"It is absolutely incredible that a Canadian government agency is helping to facilitate and accelerate the migration of the continental auto industry to Mexico, and with no guarantees of any Canadian benefit from the loan whatsoever," said Jerry Dias, Unifor National President.

EDC claims the loan will help Canadian parts makers win new business with Volkswagen.  However, there are no requirements that VW buy anything at all from Canadian firms. They are only committed to participating in a "matchmaking" process.  Even if Canadian-based firms did win a contract from Volkswagen, the work would most likely be sourced from parts plants in Mexico (rather than being made in Canada).

"If the Canadian government is really interested in supporting the auto parts sector, then it should focus on winning new investments and creating new jobs right here in Canada," said Dias. 

"It is painfully ironic that we recently lost out on a lucrative engine investment in Windsor by Ford, largely because of inadequate government support.  Yet we can somehow find $526 million to help a foreign firm invest in Mexico.  Our members are beside themselves with anger."

"Export Development Canada could play a crucial role attracting and supporting automotive investments right here in Canada," Dias said, noting EDC's valuable role during the 2009 restructuring of General Motors and Chrysler.  "But actions like this suggest that EDC has truly lost its way." 

Dias called on Industry Minister James Moore to launch a review of EDC's actions in promoting auto investment in Mexico, and prohibit future loans to support auto investments in other countries.  The Volkswagen deal comes on the heels of similar EDC support to BMW for investments in South Carolina and Mexico, and an EDC initiative this February to help Canadian parts makers open up new plants in Mexico.

Dias stressed that EDC's actions only highlight the incoherence of the federal government's auto industry policy.  "At one moment, the government acknowledges the importance of this industry, and says it wants to help.  But in the next breath, it fully endorses and facilitates the exodus of auto investment from Canada that is destroying the hopes of so many Canadian families." 

Recent federal actions undermining domestic auto investment include a trade deal with Korea (which imports virtually no automotive products from Canada) and the sell-off of shares in General Motors (so that the government could "balance" its 2015-16 budget).

"This decision is just the latest evidence of Prime Minister Harper's failure to provide the strategic leadership required to rebuild and maintain Canada's auto sector," said Dias. "We need the Canadian government to work with the auto industry, labour and municipalities here in Canada to create a meaningful auto strategy. Instead the government seems to have thrown up its hands, and is now actively facilitating the southward migration of Canadian auto jobs ."

Last year Canada sold only $484 million worth of auto parts to Mexico – down 30% since 2001 (despite the rapid expansion of Mexican auto production in that time).  The EDC loan thus represents more value than the whole Canadian parts sector sells to Mexico in a year.  Meanwhile, Canada imported $4.4 billion of auto parts from Mexico in 2014 (and over $6 billion more worth of finished vehicles).  Canada's automotive trade deficit with Mexico last year exceeded $10 billion – the largest bilateral auto deficit in Canadian history.  Unifor estimates that deficit corresponds to the elimination of over 15,000 Canadian auto jobs – or 40% of the 38,000 auto jobs lost since the Harper government was elected.

Unifor is Canada's largest union in the private sector, representing more than 305,000 workers. It was formed Labour Day weekend 2013 when the Canadian Auto Workers and the Communications, Energy and Paperworkers unions merged.

SOURCE Unifor

For further information: Unifor Communications Director Sarah Blackstock at 416-949-1072 or sarah.blackstock@unifor.org.

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