The Broadbent Blog


What we can Learn from the Oshawa General Motors Announcement

The announced General Motors closures have shown us that we need to explore a new industrial strategy, where public investments gives equity in companies, and where public control can help us preserve manufacturing, and direct it toward just social and environmental outcomes. Above all, we have to realize that it is the people, and not the corporations, who should make the economic decisions which affect them in their daily lives.   

It’s been a few days now since GM has announced the closure of numerous plants, threatening the existence of up to 14,000 jobs, at least 2500 of which are located in Ontario. While four of the five closures are in the United States, here in Canada there has been an outpouring of sympathy for Oshawa, which has been an automotive manufacturing town for more than a century now. With the auto plant set to wind down operations by the end of 2019, one thing is for certain: we shouldn’t give up on fighting for these jobs. It must be said, however, that this tragedy offers lessons to Canadians when it comes to how we approach government subsidies for corporations, and our broader industrial policies as they relate to public ownership, workers’ justice, and industry sovereignty.

First, we have to make clearer demands and place stronger stipulations on companies who want our tax dollars, to provide firm guidelines in terms of their investment and plans for job creation. In the case of companies who decide to operate in Canada, promises to do so must not be taken on the basis of goodwill — but backed up by deep penalties if/when they are broken. This approach should also apply when workers and unions make concessions to help a company remain functional; such concessions should likewise come with firm and actionable guarantees.

But often subsidies and tax breaks alone—even when accompanied by guarantees—won’t be enough to reflect the value of what it truly means to publicly invest in the Canadian economy: prioritizing economic stability and high quality service delivery. With this in mind, governments should consider demanding that companies provide equity in exchange for these tax breaks and subsidies, both so that the public can recuperate value in its investment in the case of a successful venture, and so that the public can have a voice within the operation of the venture. Indeed, Canada did acquire shares in General Motors during the 2008 crash, but subsequently sold them, never really exploring a systematic policy of seeking equity when it comes to public subsidization of corporations. Going forward, however, we have to question whether it is the best use of taxpayers money to give no or few-strings-attached cash to corporations. Exploring alternatives like crown corporations could be an option, which would manage the investments Canadians make in companies, and reinvest the proceeds in businesses which show merit and social value. In fact, the Canada Development Investment Corporation may well be an existing body that--if tweaked--could be used toward this objective.

Grappling with these ideas is vitally important, but the situation Canada finds itself in amid General Motors’ decision to divest from our auto industry calls for a more aggressive reckoning. Certainly, we have to consider the variety of options our governmental jurisdictions can use to support our auto industry. However, we need not railroad ourselves into a model predicated on the private ownership of those industries, or profit as the guiding principle for our production. Right now, we know that GM doesn’t feel it’s in their interest to produce cars in Oshawa, but it doesn’t change much of the underlying fundamentals: we have workers in Canada, we need vehicles to transport people and goods in Canada, and we have raw materials in Canada. Why should one, or even a few, private companies get to determine the economic priorities and destiny of entire communities and regions? Why can’t we—though worker and/or public investment—produce the vehicles Canadians need? . For instance, we could continue to produce automotive equipment in this country, but with a focus on the future: electric vehicles that have lower environmental footprints, as well as public transit vehicles, which if produced without the demand for big shareholder profits, could well lower the cost of communities to purchase and implement them into our existing transit infrastructure.

None of this would be about subsidizing the car production of the past, simply for the sake of nostalgia or jobs; rather, this would be a practical investment in the preservation of manufacturing, the promotion of green technology, and the proliferation of public transit across this country.

None of this is meant to be taken as a concrete policy proposal, but rather as the start of a frank discussion Canadians need to have. We are in an era of growing inequality and concentrating power in multinational corporations. This trend shows no sign of reversing, and may increase should control over the means of automation continue to be held in private hands. Canadians—and people of all nations—must ask themselves at what point does the concentration of economic power threaten, not just a couple thousand jobs in Oshawa, but the very basis of our sovereignty and democracy? By demanding more from the businesses benefiting from our tax dollars, and by using public institutions to build the Canada we want to see, we can do great things.

So let’s resolve to make 2019 the start of an intellectual revolution in Canada, where we at least question the validity of massive corporations determining what goods we produce, and what motivates us to produce them.

 

Christo Aivalis is an Editor of Active History, and a SSHRC Postdoctoral Fellow in the Department of History at the University of Toronto. He is also the author of The Constant Liberal Pierre Trudeau, Organized Labour, and the Canadian Social Democratic Left. His work has appeared in the Canadian Historical Review, Labour/le Travail, This Magazine, Ricochet, Maclean’s and The Washington Post. He has also served as a contributor to the Broadbent Institute, Canadian Press, Toronto Star, CTV and CBC. His current project is a biography of Canadian labour leader A.R. Mosher