Mobile Edition
Print
Get the Mag
Weekly UpdatesWhile governments prop up the automobile industry for a short term economic renewal, we should also look at a long term strategy to assist the North.
We know the auto sector is in trouble. People aren't buying enough cars to keep the assemble plants producing above their economic thresholds. We have temporary over capacity. Upstream, the parts manufacturers are hurting, and further upstream, steel demand has tanked. People are losing jobs, consumers are staying tight-fisted and economists see a slowdown in economic growth. This isn't good for anyone's short-term retirement plans.
Do we need to assist the automotive industry? Yes, if we want to maintain the economy moving forward. There are over 130,000 people in Canada who want to keep their jobs. We know how it feels to watch an economic engine putter, then stall. We saw it with the forest industry and we certainly don't want to see the automotive industry follow the same downward spiral.
I'm tempted to think that governments should have been as proactive in support of the forest industry as they seem have been in supporting the automotive industry. The automotive industry is about the third (130,000 jobs) of the forestry sector (340,000 jobs) and other factors, such as international competition, are at play. We're dealing with two different beasts, but Northerners have to right to feel somewhat slighted at the thought of wholesale bailouts to the automotive industry without getting a little quid pro quo. I'm proposing that we should invest in a new form of northern infrastructure as a part of the deal.
Northerners should worry about what kind of long-term commitment we are creating for our society by supporting the automotive industry. I mean, we should think about lining up the next opportunities.
Contrary to popular belief, the horse and buggy weren't outdone by the automobile: they were outdone by gasoline. The 19th century oil industry created the auto industry to find a market for their products after electricity was introduced commercially. Back then, kerosene and other distillates were extracted from crude oil and made up 10-20 per cent of a barrel. Gasoline had very little market and was a by-product of the kerosene market. Thomas Alva Edison invented the incandescent light bulb in 1877 and the market for petroleum products disintegrated until it was rescued by Henry Ford who began building gasoline-powered cars in 1908. Cars also needed a sophisticated road system to support traffic, which prompted a new wave of investments supported by public coffers. Okay, you get the point: The automotive industry gave birth to the road infrastructure out of taxpayers' pockets.
We've heard from the Nov. 19, 2008 Throne Speech that the federal Government is planning to invest in Canada's infrastructure, including roads. Cities and municipalities have grumbled for years. Our road infrastructure is aging rapidly and will soon need to be redone. In fact, we will soon need to reinvest the same way governments invested some 30-odd years ago, and which contributed to our national debt. So then, is it possible that next wave of infrastructure spending will increase our debt load? Most definitely! We will prop up the automotive industry to support the economy, and then we will have to bury ourselves further into debt to support the road infrastructure to support the automotive industry. This is a vicious cycle. We need a master plan.
[ILLUSTRATION OMITTED]
According to the World Wildlife Fund, the world will invest $16 trillion dollars in energy infrastructure between 2001 and 2030. The United States government budget for 2008 was $2.9 trillion. Our challenge this time around is to build an infrastructure that will last longer than the next boom.
Again it's important to support the automotive industry in the short term. But, collectively, we should take a hard look at where we invest our future to make sure we avoid another cycle of economic downfall. We should develop renewable energy technologies to support a new form of infrastructure, permit the reshaping of the automotive industry, support a better environmental record and better yet, give Northerners a true opportunity to engage in the next economic boom.
Dr. Luc Duchesne has published "Bioproducts in Canada's Forest: New Partnerships in the Bioeconomy" and is the President and CEO of Forest Bioproducts Inc. in Sault Ste. Marie, Ontario.
FEED