| Subject: Hypothetical... Purely Canadian Car Industry |
Author:
Dennis Laurie
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Date Posted: 04:38:37 03/13/03 Thu
Author Host/IP: 098.216-123-194-0.interbaun.com/216.123.194.98
Greg wrote: "It has everything to do with having goods to take to the global economy other than natural resources."
Suppose Canadians decided to independantly produce automobiles for example. Would we take over the existing Canadian branch plants of American and European manufacturers? They wouldn't like that, so that's not an option. Looks like we'd have to construct our own plants and assembly lines, as well as start recruiting designers and all the other people needed to start production of Canadian cars. This would be in direct competition with an established and healthy car industry already existing, and not laying down in the face of this competition.
A Canadian car plant/company could not compete with the likes of GM or Ford any time soon. Luring workers to our new companies would take massive financial incentives not readily available to an upstart company.
I do not see how starting from scratch to compete against a well entrenched and established industry would be economical. After taking into account all the enormous start-up costs, our new cars would have to break into the market share in Canada first, then move to break into the markets of other countries. Transport costs would be prohibitive if we could not break into the US market. All of our initial costs would be passed onto consumers of our new cars, pushing our price to levels not remotely competitive with established firms that dominate the European, Asian, American, and Canadian markets.
Many Canadians would choose to continue to buy now foreign made vehicles. Our small population and limited aggregate disposable financial resources would induce a situation where the Canadian market would not support our industry. The US is notorious for its vehement protectionism, as is Europe. Do we think that these governments, let alone the companies based there, will accept a challenge from our new independant industry laying down? Again, breaking into these markets would make costs prohibitive.
Would the Canadian gov't subsidize this industry? NAFTA and the FTA would frown upon that, as would the WTO most likely. Should the gov't subsidize an industry that likely would not dominate the Canadian market and definately not dominate any other market? Would tax-payers be willing to foot the bill for a new and weak industry that they all do not support and would be unnecessary in many eyes?
What about the risks of investing time and money into a new venture that would have to compete with the likes of GM, Ford, Daimler-Chrysler, BMW, Honda, Hyundai, Nissan, etc.? Would auto workers be willing to give up good paying and relatively secure jobs with an established giant to work for an infant national car manufacturer that has no guarantee of success, and arguably has very little chance of becoming successful and self-sustaining, let alone competitive with these giants?
How about these concerns? Anyone in the Orchard camp care to enlighten me as to your solutions to these hastily compiled but very plain to see obstacles to one particular policy stance?
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