Canadian Auto Workers More Cost Effective Than U.S. Workers, Study Says

Cameron Aubernon
by Cameron Aubernon
canadian auto workers more cost effective than u s workers study says

The land of Canadian Tire, Tim Hortons and Michelle Creber has yet another thing going for it: Their auto workers have a cost advantage over their two-tiered brothers and sisters down south according to a study from Toronto, Ontario-based Scotiabank.

In the report, Scotiabank chief economist Carlos Gomes explains that, as a result of the recent Unifor contract, new hires to Canadian assembly plants are more cost effective than those brought on board in United States-based facilities. The price tag? $37 for a U.S. new hire versus around $30 (in USD) for a Canadian new hire.

Furthermore, while someone screwing together a Camaro will reach parity with older workers in 10 years’ time, a new hire building Escapes will remain below senior workers for the entirety of their career. A weaker Canadian dollar, pegged at 96 cents USD as of this writing, also adds to the Great White North’s competitive streak.

With the threat of overcapacity and bottlenecks looming over the North American auto industry, along with increased demand from global markets, automakers are looking at what they can do to keep the machine running. For Ford, it means a $700 million investment in the retooling of its Oakville plant to build crossovers for export markets, while for General Motors, it means delaying the shutdown of their Oshawa plant until sometime in 2016. And of course, according to Gomes, Canada can begin to diversify its automotive exports beyond the NAFTA zone, a result of signing a free trade agreement with the European Union.

Photo credit: Chrysler

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  • Lou_BC Lou_BC on Nov 14, 2013

    Scotiabank funded this study.... why? A bank that wants to loan money to businesses is going to have a harder time doing that if there is a belief that Canada is not a good place to do business. One could factor in healthcare and even pensions as being "public" will lower costs but private companies and public agencies fund plans through organizations like BlueCross for medical and dental. I do get the impression that the Unifor contract was less generous than the UAW contracts. GMC/Ford/Fiat et al are going to say that Canada is a more expensive place to do business since they want to pressure the Canadian and Ontario governments for concessions. They also want to pressure unions for concessions. If Ford is investing in Canada, it probably has more to do with the recent FTA which will allow Canadian content vehicles to go to the EU duty free. I get the impression that if they are investing based on that premise, they must feel that the USA will balk at an EU FTA. Ford could end run USA tariffs by importing into Canada under the FTA and do final assembly to qualify for NAFTA importation into USA.

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    • Dimwit Dimwit on Nov 14, 2013

      All of our big banks own investment arms as well. They are always running studies and economic analysis of one sort or another. Pretty respectable. Some of the more controversial ones have gone on and made government policy.

  • CGHill CGHill on Nov 14, 2013

    I admit here to being something of a fan of Scotiabank, not only for its curious history -- as the name implies, it was originally the Bank of Nova Scotia, though the main office was relocated to Toronto at the turn of the century, and not this century either -- but for the fact that they do pretty darn good customer service over Twitter. I also admit to being a fan of Michelle Creber, a justly-famed Canadian voice actress and singer, whom TTAC author Cameron Miquelon actually interviewed not so long ago. (This is why you should always read the byline, when there's one beyond "TTAC Staff".)

  • Freddie Freddie on Nov 14, 2013

    Sorry, but I have to ask... Is Canada even a real country? Looks big on the map but most of the population snuggles against the US border, including the auto plants which are within spiting distance of Detroit. Even with metric road signs and a French speaking region, nothing about Canada - especially the Mayor of Toronto - seems particularly "foreign". Hey, don't get mad. Some of my favorite cars have had a VIN that starts with "2".

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    • Sooke Sooke on Nov 19, 2013

      No offense, but the reason we snuggle up against the border is weather. The further north you go, the colder it gets.

  • Lou_BC Lou_BC on Nov 15, 2013

    @Freddie - are you a troll or just a complete idiot or both? If you spend any time in either country you will see similarities and will pick up on differences. Each country has a different history. why don't you start there.

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    • Lou_BC Lou_BC on Nov 15, 2013

      @Big Al from Oz - yes, typical exceptionalistic viewpoint. One cannot think "outside the box" if they do not try to remove their head from the box.