Encouraging electric vehicles: U.S. Buy American policies threaten Canadian auto worker jobs

U.S. President Biden’s Build Back Better Act passed the U.S. House of Representatives in November, including  incentives to encourage adoption of electric vehicles: a consumer tax credit of $7,500 for electric vehicles made in the U.S., and an additional $4,500 tax credit if the vehicle was made with union labour.  The news was welcomed by U.S. auto workers’ union UAW, but in Canada, workers and the government are alarmed. A press release from Unifor, the Canadian auto workers’ union, is titled “President Biden needs to realize he is shooting U.S. auto sector in the foot” , stating: “The fact is U.S. assembly plants couldn’t survive without the engines and other components we make here. ….. For that matter, he can’t build a sustainable BEV industry without the nickel, cobalt, manganese and other minerals coming out of Canada, either.” The business-oriented Financial Post published “Why America’s rush to EVs might kill the entire Canadian auto parts business”. As reported by CBC News, federal government officials have threatened retaliatory trade measures, arguing that the Buy American provisions amount to a 34 per cent tariff on electric vehicles assembled in Canada and violate the terms of the U.S.-Mexico-Canada Agreement (USMCA) .  An alternate solution is described in  “Canada willing to ‘align’ EV incentives with U.S. to avert tax-credit crisis: Trudeau” (Toronto Star, Dec.13).  CTV  News offers an Explainer which also summarizes reactions from government, industry, and labour. 

In Ontario, where most Canadian auto jobs are located,  the provincial government announced on December 9 the creation of the Premier’s Council on U.S. Trade and Industry Competitiveness, to be chaired by Unifor National President Jerry Dias, working with the Minister of Economic Development, Job Creation and Trade. From the press release: “This new Council, with the full support of our government, will continue to advocate for Ontario against unfair Buy American policies by highlighting the cost of protectionism to businesses on both sides of the border and promoting a Buy North American approach to our auto sector.” 

On October 17, Ontario had announced Phase 2 of its Driving Prosperity – The Future of Ontario’s Auto Sector  policies “to secure production mandates for hybrid and electric vehicles, create a domestic battery ecosystem, and strengthen Ontario’s position as a North American automotive and electric vehicle (EV) innovation hub.”   To date, the Ontario government strategy has been to incentivize manufacturers but resist the kinds of consumer incentives Biden has proposed, as described in “Doug Ford talks big on EVs but won’t reintroduce rebates”  (National Observer, Dec. 13).

Government committee recommends further study for support for workers amid transition to electric vehicle production

The Standing Committee on Environment and Sustainable Development presented their report, The Road Ahead: Encouraging the Production and Purchase Of Zero-Emission Vehicles In Canada to the House of Commons on April 13.  The Committee had received eighteen briefs and heard from twenty-one witnesses since the Fall of 2020 – available here.  The importance of reducing transportation emissions was accepted, and the topics of discussion included purchase incentives, expanding ev charging infrastructure and the impact on the electricity sector, the potential of hydrogen-powered vehicles, and more. The resulting report makes thirteen recommendations, to which the government is requested to respond. Amongst the recommendations: the existing federal incentive program for EV purchase be continued and expanded to include used EV’s, that the price cap be eliminated, with eligibility geared to income; that the Government of Canada build on existing initiatives, like the Green Mining Innovation program, to improve the environmental performance of Canadian minerals used in battery and hydrogen fuel cell production; and that the federal government  work with provincial and territorial governments to develop recycling and end of life management strategies for ZEV batteries.

Recommendation #6 addresses the concerns of workers: “The Committee recommends that the Government of Canada study opportunities to support automotive sector workers while facilities are transitioning to produce ZEVs, and consider dedicated funding to retrain automotive sector workers for ZEV production.”

Most of the input to the Standing Committee was from industry representatives, but the report attributes Recommendation #6  largely to the testimony of Angelo DiCaro, Research Director of Unifor on November 23, 2020.  From the report: “Witnesses cautioned that it will be challenging to reorient Canada’s automotive sector to produce ZEVs. It takes time for producers to bring vehicles to market, and to retool facilities and retrain workers to produce ZEVs.  Angelo DiCaro suggested that the Government of Canada should ensure that the employment insurance system will support workers during plant retooling. He also noted that the transition to ZEVs could threaten jobs in Canada’s automotive parts sector, especially among businesses that produce parts for the powertrains that propel ICEVs. To compensate, Mr. DiCaro said that Canadian governments should set rules about the afterlife of vehicles that could create jobs in vehicle disassembly and recycling.”    

Specifically, when asked later by NDP MP Laurel Collins, “what kind of retraining and income supports do Canadian auto workers need to support a just transition to a zero-emissions future?” DiCaro identified the powertrain segment of the auto parts industry as the most vulnerable, and continued…. “as plants transition, as will happen with Oakville, we have to see how long these transition times will take in our next round of bargaining. I can assure you that, if this is going to be a two-year or a 16-month transition to get that plant retooled, there are going to be questions about income supports for those workers as they retrain and wait for these cars to come online….. This is front and centre. I think the act of collective bargaining gives us an opportunity to explore that. Certainly our employment insurance system and our training systems are going to have to be looked at more carefully.”

News update for June 2016: Ontario rolls out details of its Climate Action Plan

On June 8, 2016,  a press release  from the Premier’s Office summarized the Climate Change Action Plan; the detailed plan is here .  A separate press release clarified the province’s position on renewable natural gas – a strong point of opposition to the earlier announcement of the Plan.   Unifor responded with a press release stating “Ontario industries must have support towards a low-carbon future, including just-transition for workers,” …. “The Action Plan provides a down payment on that transition, but much more will be needed to ensure that climate action and industrial strategies work together.” For a compilation of other reactions, see “What Ontarians think” ;  also, Clean Energy Canada  (“Ontario is embarking on an energy transition, not a revolution.”  “commendable”); Greenpeace (“a courageous decision not to take the path of least political resistance.”)

Other Ontario announcements supporting the province’s climate change objectives have been issued:  May 25,  the government announced that $900 million over four years will be directed from the cap and trade proceeds for energy retrofits for social housing and residential apartment buildings.

On June 1, the Ontario Legislature passed  the Waste-Free Ontario Act  which will encourage innovation in recycling processes and require producers to take full responsibility for their products and packaging. The new provisions will be overseen by Resource Productivity and Recovery Authority, replacing the Waste Diversion Ontario agency.  For an update on European progress on waste and the circular economy , see The European Environmental Agency report More from less – material resource efficiency in Europe (June 9).

June 10: Ontario announced new investment by GM Canada  which promises to create 700 new engineering and software development jobs –  in Oshawa, developing “the next generation of connected, autonomous and alternative-fuel vehicles”;  in Markham, software development, and in Kapuskasing, where it will upgrade its cold-weather testing facility. On  June 16,  Ontario announced  it  will provide $85.8 million to  Fiat Chrysler Canada , to support advanced training and plant upgrades for the production of the Chrysler Pacifica in Windsor.  The Pacifica will be  the first plug-in hybrid electric minivan to be built in North America.