Made in Canada (still) Matters!

The expansion of public transit is a key component of achieving Canada’s environmental goals. In every major city, there are plans to give residents greater access to transit service as a way to shift commuting patterns and reduce GHG emissions. Expanding these services can result in good jobs building transit lines and new vehicles, as well as maintaining the transit infrastructure and running the operations on a daily basis.

A series of embarrassing reports on “public-private partnership” (P3) contracts, however, have highlighted how transit is being transformed from a public good into an income generating stream for huge corporations. The latest surprise involves the Ontario government’s decision to quietly reduce the Canadian content of vehicles for Doug Ford’s signature Ontario Line in Toronto from 25 per cent to a mere 10 per cent. That allowed the $9 billion project to be won by a consortium headed by Japanese conglomerate Hitachi, which includes a $2.3 billion contract for Hitachi light rail vehicles – none of which will be built in Canada.  

The P3 model has grown from basic construction projects to complex 30-year deals to build, finance, operate, and maintain new lines. Nobody can really predict what maintenance costs will be 30 years into the future, so an ample profit margin is built into every contract. Even with that cushion, companies keep coming back for more public money. Now the federal government has announced it will use a P3 structure for its new High-Frequency Rail passenger rail project between Windsor and Quebec City, potentially threatening the viability of publicly-owned VIA Rail.

Canada possesses a number of manufacturing facilities, including a highly skilled workforce that build high quality transit vehicles – everything from buses, light rail vehicles and subway cars. Public procurement was used for decades to support Canadian industry and jobs. With free trade, many procurement rules were changed, but the United States fiercely defended its “Buy America” policies for transit vehicles. The big difference is that American rules require 70 per cent of vehicle parts to be from the U.S., as well as final assembly. In recent years, Winnipeg’s New Flyer Industries has shifted all completion of its buses to the United States. VIA Rail just outsourced production of 32 new trainsets to Siemens – a contract worth $989 million that has also gone to the U.S.

The impact is real. For the city of Thunder Bay, manufacturing rail vehicles has been one of the largest sources of good jobs. The manufacturing and assembly plant, sold by Bombardier to French multinational Alstom, employs 1,300 during peak production. Another two dozen Ontario companies supply parts.

For Dominic Pasqualino, president of Unifor Local 1075 representing Alstom workers, the news of the loss of the Ontario line flies in the face of Doug Ford’s “Ontario’s Open for Business” rhetoric. “It’s devastating. We had a lot of promises from Doug Ford and his government. The first time I talked to Ford, there were 800 people working in the plant. Now we’re down to 150.”

The move by the Conservatives should come as no surprise. In 2005, when Toronto was negotiating with Bombardier to replace its aging subway cars, conservative city councillors attacked the Toronto Transit Commission (TTC) for its approach and demanded that bids be solicited from companies intending to off-shore production to reduce costs. The labour movement responded with a campaign entitled “Made in Canada Matters.” In the end, the TTC and city council voted to defend Canadian jobs.

It took another fight to set a provincial standard at 25 per cent Canadian content, even though it could have easily been higher. Thunder Bay workers are counting on the next major order of subway cars, with the TTC maintaining this benchmark, to bring jobs back to their community.
Canadians support transitioning to a green economy, but there are still concerns about jobs being displaced. The best way to bring people on board for climate action is to show tangible results that improve lives. With the ongoing challenges facing our supply chains, it is clear that producing things in this country is a key part of our long-term economic sustainability.

Canada has not had a robust industrial strategy for many years, and there’s no better time than now to develop one. As we switch off fossil fuel for vehicles, and retrofit our homes, schools, and workplaces, there will be an immense demand for cutting-edge manufactured items, including millions of heat pumps. The question becomes: where will they be built?

We should not have to subsidize wealthy companies with public money in order to locate production here. Public policy should set clear targets and create clusters of research, design and production for the green economy. There can be many good jobs created in that cleaner economy, if we make that decision as a country. Getting there will require political will, which means standing up for communities and putting people and the planet before profit. Every single time.

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