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Would assembling Chinese EVs in Canada be a 'devolution' of the auto industry · INSIGHT TODAY

• 0:00
  Speaker 1: Ottawa is laying out its conditions for building Chinese electric
• 0:04
  Speaker 1: vehicles at an Ontario plant. Yesterday, Bloomberg reported that Stilantis
• 0:09
  Speaker 1: is in talks to make Chinese evs in Brampton. Thousands
• 0:13
  Speaker 1: of workers remain laid off at that plant after the
• 0:16
  Speaker 1: automaker moved Jeep production.
• 0:18
  Speaker 2: To the US.
• 0:19
  Speaker 1: Ottawa has vowed to claw back hundreds of millions of
• 0:23
  Speaker 1: dollars in incentives from Stalantis unless production returns, and today
• 0:28
  Speaker 1: the Industry Minister said that simply assembling pre made Chinese
• 0:32
  Speaker 1: EV's won't meet the bar. If they bring back production,
• 0:37
  Speaker 1: it must be along with the union and the province
• 0:43
  Speaker 1: supporting their plan and their three conditions. First, labor standards.
• 0:50
  Speaker 2: Conditions for workers need to be good and actually the
• 0:55
  Speaker 2: same they were and even better.
• 0:56
  Speaker 1: First.
• 0:57
  Speaker 2: Second, it needs to support the local supply chain. We
• 1:02
  Speaker 2: can't bring cars in a kit to Canada. And finally,
• 1:06
  Speaker 2: the software needs to be secure.
• 1:09
  Speaker 1: Joining me now, Flavievopei is the president of the Automotive
• 1:12
  Speaker 1: Parts Manufacturers Association. Welcome to the show. If it could
• 1:17
  Speaker 1: get some of the thousands of people who were laid
• 1:20
  Speaker 1: off in Brampton working again, would assembling Chinese evs be
• 1:24
  Speaker 1: there be a positive for Canada's auto sector.
• 1:28
  Speaker 3: Well, let's define assembly Caarina. That plant has been making
• 1:33
  Speaker 3: cars since nineteen sixty two. Seventy five percent of a
• 1:36
  Speaker 3: vehicle come from part suppliers, So you're dealing with that
• 1:38
  Speaker 3: plant and then hundreds of plants that feed that that.
• 1:42
  Speaker 3: When that plant is going, there's nine to twelve thousand
• 1:45
  Speaker 3: other jobs there. You make cars, you source parts, you
• 1:48
  Speaker 3: source raw materials from Canada and the US and in
• 1:50
  Speaker 3: part Mexico. You build them to a usmcity standard, and
• 1:54
  Speaker 3: those cars compete with all the other car companies that are.
• 1:57
  Speaker 4: Trying to do the same thing.
• 1:58
  Speaker 3: What's contemplated here is, hey, by the way, let's forget
• 2:01
  Speaker 3: about all that. Let's have those cars made in China
• 2:04
  Speaker 3: like Ikea furniture kits, and then send them over, maybe
• 2:08
  Speaker 3: disassemble them partially, take the wheels, the doors off, and
• 2:12
  Speaker 3: then have three hundred four hundred workers with screwdrivers and
• 2:17
  Speaker 3: wrenches and reassemble those cars. That is an import quota cheat.
• 2:23
  Speaker 3: That's not automotive assembly. That's not manufacturing. The CEO of
• 2:29
  Speaker 3: that company said to the Prime Minister, when you guys
• 2:32
  Speaker 3: settle the USMCA review and if you get access to
• 2:37
  Speaker 3: the US market again, we will put a vehicle there
• 2:41
  Speaker 3: and go back to what we were doing two years ago.
• 2:45
  Speaker 1: Now, do we know for sure that in the talks
• 2:49
  Speaker 1: between Stilantis and the Chinese company that it is about
• 2:58
  Speaker 1: these sort of breakdown kits or do we know that
• 3:01
  Speaker 1: for sure because that's what it's been alluded to. But
• 3:04
  Speaker 1: I wanted to know whether you could shed some light
• 3:07
  Speaker 1: on that.
• 3:08
  Speaker 4: No.
• 3:08
  Speaker 3: Look, first of all, I'm not part of the discussion,
• 3:11
  Speaker 3: but I do know that that's one of the options presented.
• 3:14
  Speaker 4: By that company.
• 3:15
  Speaker 3: That company, the first option they present was if you
• 3:18
  Speaker 3: guys all wait until July August, September we settled this USMCA.
• 3:24
  Speaker 3: If it breaks back in everybody's favor, we're going to
• 3:26
  Speaker 3: put a product in there, maybe the equivalent of the
• 3:29
  Speaker 3: Jeep Compass. There's a Chrysler SUV that hasn't been assigned yet.
• 3:34
  Speaker 4: Maybe it's some ramp production.
• 3:37
  Speaker 3: I'm sure that the government's pressure on Stilantis, which is good.
• 3:41
  Speaker 3: We've supported it. I said, Stilantis come up with a
• 3:43
  Speaker 3: bunch of options. Somebody told Bloomberg, who first reported it yesterday,
• 3:49
  Speaker 3: that this was one of the options. I think a
• 3:51
  Speaker 3: lot of us are saying, hey, that option is not
• 3:52
  Speaker 3: an option. Don't even try. That's a devolution of that
• 3:57
  Speaker 3: whole automotive ecosystem in pure region. But it also is
• 4:01
  Speaker 3: a signal that if you let one of the five
• 4:03
  Speaker 3: automakers that's currently manufacturing vehicles here in a traditional competition
• 4:10
  Speaker 3: and allow them to devolve to a model that gives
• 4:13
  Speaker 3: them an incredible cost advantage, you put undue pressure on
• 4:16
  Speaker 3: the other.
• 4:17
  Speaker 4: Four automakers that are here.
• 4:19
  Speaker 3: It is a very slippery slope, and we have a
• 4:22
  Speaker 3: deal with the Chinese that the industry didn't want, but
• 4:25
  Speaker 3: we understand the prime ministers are prime minister for the
• 4:27
  Speaker 3: whole country and we had to do something for the
• 4:29
  Speaker 3: A sectors. There is an import quota here. You can
• 4:32
  Speaker 3: send them in forty nine thousand of them, or if
• 4:34
  Speaker 3: Canadians will buy them, that's fine, but if you want
• 4:36
  Speaker 3: to send them in partially assembled, well they should count
• 4:39
  Speaker 3: against that same hard cap. One of the things that
• 4:42
  Speaker 3: we said to the Prime Minister and his team was
• 4:45
  Speaker 3: if you're going to allow the door to open, then
• 4:47
  Speaker 3: you should have a point a three year, point a
• 4:50
  Speaker 3: five year point where they review and we should require
• 4:54
  Speaker 3: them to manufacture in this market like we do everybody else,
• 4:58
  Speaker 3: or get rid of that import quota. We said they
• 5:03
  Speaker 3: should JV like the Chinese force the West to JV
• 5:08
  Speaker 3: taxes the Chinese market. China learned a lot about automaking
• 5:13
  Speaker 3: from Western partners, forced Western partners, and in many celebrated cases,
• 5:19
  Speaker 3: famous cases, stole ip to jump the line. Well, if
• 5:23
  Speaker 3: we're going to give them access to this market, we
• 5:25
  Speaker 3: should make them work for it. There's no point in
• 5:26
  Speaker 3: giving them away. And there's no point in giving away
• 5:28
  Speaker 3: the Brampton assembly plant when we could work just a
• 5:33
  Speaker 3: little bit harder and get back to a place where
• 5:36
  Speaker 3: we were manufacturing with thousands of jobs and hundreds of
• 5:40
  Speaker 3: millions of dollars of payroll.
• 5:42
  Speaker 4: And that plant when it was making one hundred and fifty.
• 5:45
  Speaker 3: Thousand cars a year and they were fifty thousand dollars cars,
• 5:47
  Speaker 3: was buying three billion dollars worth of Canadian parts and
• 5:51
  Speaker 3: raw materials a year.
• 5:52
  Speaker 4: We shouldn't give that up because of.
• 5:56
  Speaker 3: A convenient first shot that would have a total impact
• 6:01
  Speaker 3: of thirty million dollars a year. Because we're under pressure
• 6:05
  Speaker 3: from the Chinese or consumers who are saying, look, I
• 6:08
  Speaker 3: want access to cheaper evs. You know, your access to
• 6:13
  Speaker 3: those evs and your desire for those evs is important
• 6:17
  Speaker 3: to note, but they're not important in the than the
• 6:19
  Speaker 3: jobs of the people who are there now.
• 6:21
  Speaker 1: You mentioned that if this were actually be allowed, it
• 6:25
  Speaker 1: to be counted against the quota of the forty nine
• 6:28
  Speaker 1: thousand evs that Canada has said could come into from
• 6:34
  Speaker 1: China into Canada. But when the Premister, when that was announced,
• 6:39
  Speaker 1: the Primeister, it was explicit that they're trying to get
• 6:42
  Speaker 1: China to invest in the Canadian auto industry. So in
• 6:46
  Speaker 1: what capacity should China be allowed to invest?
• 6:50
  Speaker 3: Look, we have the Canada Investment Act that regulates how
• 6:55
  Speaker 3: we deal with foreign direct investment, mergers and acquisitions from
• 6:58
  Speaker 3: parties that may or may not have the same industrial
• 7:02
  Speaker 3: objectives that we do. We can use that Act to
• 7:04
  Speaker 3: turn around and say, look, if BYD wanted to build
• 7:07
  Speaker 3: a plant here and meet the USMC standard and try
• 7:11
  Speaker 3: to access those markets, or try to access the European
• 7:14
  Speaker 3: market from here, or South American market from here, there
• 7:16
  Speaker 3: are minimum content levels and all those trade agreements that
• 7:19
  Speaker 3: are local content. You've got to buy parts and raw
• 7:22
  Speaker 3: materials from here. BYD has said publicly last week that
• 7:26
  Speaker 3: they had no intention of joint venturing in Canada and
• 7:29
  Speaker 3: has expressed that they want to do that in the US.
• 7:32
  Speaker 3: We get calls every single day since this agreement in
• 7:35
  Speaker 3: principle from Chinese Tier one manufacturers, raw material suppliers, and
• 7:40
  Speaker 3: from Chinese car makers who say, help us enter this market,
• 7:46
  Speaker 3: help us find JV partners.
• 7:48
  Speaker 4: And what we say to them is what we say
• 7:50
  Speaker 4: to everybody else.
• 7:51
  Speaker 3: If a part supplier JVS with a car maker and
• 7:55
  Speaker 3: tries to sell cars together on a brand a cone,
• 7:58
  Speaker 3: that part supplier is going to lose the parts supply
• 8:01
  Speaker 3: contracts they have with other OEMs. You can't compete with
• 8:03
  Speaker 3: your customer, but good luck, we're going to make introductions
• 8:06
  Speaker 3: for you.
• 8:07
  Speaker 4: If you managed to set up.
• 8:09
  Speaker 3: A plant that is a two billion dollar investment that
• 8:13
  Speaker 3: buys three billion dollars worth of parts, buys batteries and
• 8:17
  Speaker 3: raw materials in this country, then you become part of
• 8:20
  Speaker 3: this country's auto sector. I haven't heard from anybody who
• 8:24
  Speaker 3: I said, Hey, that's what I want to do.
• 8:26
  Speaker 4: Help me make some intros. They've all called or reached out.
• 8:30
  Speaker 3: Through intermediaries and said, how can we circumvent this JV?
• 8:34
  Speaker 3: How can we circumvent the hardcap and I say call
• 8:37
  Speaker 3: somebody else.
• 8:39
  Speaker 1: Well, thank you for breaking it all down for us.
• 8:41
  Speaker 1: That's Flavio Vope, president of the Automotive Parts Manufacturers Association,