Auto Bargaining in Canada, 1965–87

  • Kenneth P. Thomas
Part of the International Political Economy Series book series (IPES)

Abstract

The US-Canada Auto Pact of 1965 created not only a North American market for automotive production and sales but a North American market for automotive investment as well. For the first time, bidding for investment between US states and Canadian provinces was possible. In this new environment, the bargaining power of the Canadian government fell relative to that of Ford and General Motors (GM) because of the new cross-border mobility of production and investment competition among states and provinces. This is indicated by the cost the Canadian federal and provincial governments incurred for automotive investments, as measured by investment incentives given to the automakers. No incentives were provided for the Auto Pact-era plants built in the 1960s; in the late 1970s, Canadian governments gave Ford 12.8 per cent of the value of its investment for an engine plant in Ontario and were prepared to give 15 per cent for a GM parts plant in Quebec which was ultimately not built. In the mid-1980s, the Canadians gave 17 per cent of the capital cost of the GM/Suzuki joint venture in Ontario and provided 43.8 per cent of the cost for GM to modernize its assembly plant in Ste.-Therese, Quebec. These worsening outcomes took place despite the decreasing concentration of the industry (a factor which should favor the host) and without such firm-favoring developments as acquisition of new allies in the host country or new technology beyond the reach of the host government (both more relevant with less developed host countries).

Keywords

Europe Income Explosive Product Line Dition 

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Notes

  1. 9.
    National unemployment statistics from Statistics Canada, Canadian Statistical Review, December 1973, Section 1, p. 16. Provincial unemployment from Canadian Statistical Review, December 1966, Table 24, p. 18.Google Scholar
  2. 10.
    Statistics Canada, Canadian Statistical Review, December 1987, Section 1, p. 10, for national rate; ibid., December 1979, Section 4, Table 5, p. 47 for Ontario rate.Google Scholar
  3. 15.
    Statistics Canada, Canadian Statistical Review, December 1987, Section 4, Table 5, p. 53.Google Scholar
  4. 16.
    Statistics Canada, Canadian Statistical Review, December 1987, Section 4, Table 5, p. 53, for 1986; Statistics Canada, Canada Yearbook 1990, Table 5.6, pp. 5–22, for 1987.Google Scholar

Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 1996

Authors and Affiliations

  • Kenneth P. Thomas

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