Canada fears US companies more likely to head home following blockade

Hundreds of police on Feb. 13 moved in to end a six-day standoff at the foot of the Ambassador Bridge in Windsor, Ont., arresting close to 50 blockaders who paralyzed Canada’s auto industry.

As truck traffic resumed crossing the Detroit River later that night through the reinforced corridor, the industry tallied the cost to production and weighed the new threat to Canadian competitiveness. Estimated losses to cross-border automotive trade ranged from more than $383 million to $1 billion, but some stakeholders fear the toll will be even greater for the future of Canada’s auto sector.

“You don’t go play the Super Bowl with 10 guys on your side of the ball. That’s what we’re doing now,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA).

In every capital investment or vehicle-program discussion going forward, Volpe said, Canada will enter shorthanded, with the blockade being a risk that must be “addressed if not mitigated.”

The global auto industry was already keeping close watch on where it parks its North American investment, said David Adams, president of the Global Automakers of Canada, which represents the interests of overseas car companies.

Two years of pandemic-related shipping and production disruptions have made shortening supply chains a priority, he said. The blockade will become another factor that global investors consider when deciding on a locale for their spending.

“It’s just one more thing that gets added to the whole equation,” Adams said.

The paralysis at North America’s busiest land border will come with an immediate cost as well.

Volpe estimates that the price tag for lost parts and assembly plant production totals about C$1 billion, or US$790 million.

An analysis by the Anderson Economic Group estimates the direct costs at roughly  $300 million. Its model does not account for the total costs to workers in Canada, however, making the total losses “much higher,” the Michigan-based consulting firm said.

Frayed cross-border relationships could be costlier still.

The blockade further complicates two years of onerous requirements for moving goods and personnel across the border, said Jeanine Lassaline-Berglund, president of the Canadian Association of Moldmakers (CAMM).

“This could be the straw that breaks the camel’s back.”

Likewise, Rakesh Naidu, CEO of the Windsor-Essex Regional Chamber of Commerce, said he has fielded calls from suppliers whose U.S. customers are asking whether they plan to move operations across the border, though he expects they can be talked down.

“Now that things are moving back, I’m sure we can do damage control,” Naidu said. “I’m sure we can assure our customers ... that we continue to be a very reliable partner, we continue to support the highly integrated supply chain.”

Tim Galbraith, sales manager at mold maker Cavalier Tool & Manufacturing Ltd. in Windsor, isn’t so sure. Although he has not heard concerns from customers so far, they could surface down the road.

“It’s only later you find out that hey, you lost business because somewhere, someone on the team who’s in charge of risk mitigation has said: ‘Gee, it’s not a good idea to do that, guys. Let’s place the order somewhere else.’ ”

In nearby Tecumseh, supplier Cottam Diecasting Ltd. laid off half its 86 employees as the blockade dried up its supply of raw materials and slowed shipments to customers. President Henry Dupuis is confident that Cottam can retain current business but he’s less confident of the future.

“Any new customers I’m working on getting, who have an opportunity to source in Canada or the U.S. or even Mexico for that matter, may not likely choose Canada.”

The imbroglio at the bridge also raises the spectre of a repeat event as the industry works to land new battery plants and shore up its place in the fast-electrifying global industry.

The country’s reputation as a reliable, cost-effective part of the supply chain is on the line, said Dennis Darby, CEO of Canadian Manufacturers and Exporters (CME), which represents goods producers across all sectors of the economy.

“We’re shooting at our own net here. This is about Canadians getting in the way of their own economy.”