Reagan was Ontario’s Hero
Doug Ford ran commercials on US tv this week that garnered a significant reaction from their intended target. The White House announced it was suspending trade negotiations with Canada as the result. If the idea was to push the public or the Supreme Court onside with limiting tariffs, the exercise failed spectacularly.
And it should fail, because the real truth of what Reagan did was to give Ontario the opportunity to shine as a manufacturing destination. For those of us old enough to remember the seventies and eighties North American car manufacturing was being decimated by Corporate Average Fuel Economy ratings and clean air regulations. The large V8 powered luxo-cruisers of the sixties were having their lunch handed to them by the Japanese. Toyota, Datsun and Honda were making small affordable cars that got great gas milage and didn’t pollute as much.
Ford, General Motors and Chrysler could not compete. It would be a generation before they really started making cars that you were excited to buy again. We bought cars in the eighties from the Big 3 because they were built here, not because they were better. The imports were funny little things, the VW Rabbit, the Toyota Corolla, the Datsun 510 and the Honda Civic all sold plenty of vehicles here in North America. Mazda, Subaru and even Hyundai all sold cars here that got better milage and had a fun to drive factor.
All of these manufactures and there cars were gradually impacting the home manufacturing base. The Big Three needed to produce the smaller more fuel efficient cars people now wanted, and do that with a bloated unionized workforce with huge pension obligations. Chrysler started slipping into bankruptcy, GM and Ford were not far behind. The writing was on the wall that these companies could no longer keep up the R&D expenditures and the pension and health benefits. These massive vertically integrated companies began to spin off their parts businesses maintaining the core which was the assembly plants.
The rebuilt war economies of Japan and Germany had the advantage of building cars designed for smaller roads and confined spaces. No big open roads were available in Europe or Japan like in North America. Sure Germany had the Autobahn but it did not compare in scope to the Interstate system and the perceived desire for big floating luxo-cruisers made here. Cars like the Datson 240z, the Mazda RX7, the BMW 2002 and the Subaru WRX changed all that. All kinds of fun little cars were being introduced and snapped up by the public. Cheaper to buy and maintain they made a ton of sense. The Big Three were expiring even faster.
And then along comes the Great Communicator, Ronald Reagan. Honing his craft, crossing the country giving speech to the employees of General Electric in the 50’s and 60’s, Reagan became one of the greatest public speakers of all time. He just had a way about him that made you comfortable with what he was saying.
The speech that the commercial that Doug Ford commissioned refers to was from 1987. The purpose of the speech was to let the citizenry know that not longer was the United States going to allow the Japanese Government to take advantage of the people of the US. Their unfair trade practices in transsistors and cars had to stop and as the Japanese were not going to restrict themselves, the US was going to impose staggering restrictions on this aspect of trade.
Equivalent tariffs and quotas of 60% were imposed.
And so we began having a very robust foreign auto assembly economy develop here in Ontario. Our low municiple taxes, low electricity and no health care costs gave for low operating overhead when compared to some of the US States competing for the business. The ability to create these businesses with unions also was a boon as the examples of Magna and Linamar led the way.
A healthy auto parts ecosystem and timely government help had the big three and Honda and Toyota thrive here in Canada. Ontario became the state/province that produced the most automobiles. But times are a-changin’.
The United States wants to repatriate as much manufacturing as possible. Certainly given the great power struggles that exist today, this is a prudent plan. What a don’t fully understand is how an isolationist United States policy is more prudent than one that creates fortress North America. Or at least fortress US/Canada given the years of corruption in Mexican government. Canada has untold resources under soil and great intellectual and labour resources as well. Developing a cohesive immigration strategy for both countrieswould likely be the biggest sticking point.
Canadians, in general, had no issue with the US until recently. It is not hard to imagine that the relationship could return to its historic roots of neighbourly co-dependence. We need their defence, they need our resources. I understand our need to feel superior regarding our social safety net, I do not share the feeling as I understand that thrade-offs are required for us to afford the social system we have that’s falling apart. Defence is one of the cast offs.
s.A strong manufacturing base, either on our side of the border of theirs should be a common goal. It strengthens both economies and their peoples. Pushing the Canadian Government into the hands of the Chinese Communist Party seems to me to be the wrong strategy. Just as pushing the White House with dumb propagandist ads makes no sense either. Moving forward trying to find common ground where both sides find a win is important. Sadly neither side seems to want this.