Job Losses to US Alarm Canadians
FREE TRADE AGREEMENT
THE Canada-United States Free Trade Agreement is being blamed for a series of layoffs and plant closings across Canada. The announcements are all recent and they affect at least 4,390 workers, most of them in the industrial heartland of Ontario. Critics of the free trade agreement, which came into effect last Jan. 1, are saying their fears have been confirmed. ``A lot of these jobs are moving to the United States,'' says Bill Howes of the Labor Council of Metropolitan Toronto. ``The Free Trade deal means there is less incentive for multinational companies to keep plants in Canada.''
The Canadian government has not been persuaded by this argument. It agreed with the US Nov. 30 to speed up tariff cuts covering $6 billion in trade. The original deal wipes out tariffs and many other trade barriers within a decade. The speed-up affects chemicals, pharmaceuticals, printed circuit boards, scientific instruments, electric motors, and some other items.
Those in favor of free trade say the layoffs are due to the rising Canadian dollar and the globalization of trade. ``I don't think the free trade agreement has anything to do with this,'' says John Grant, chief economist with the firm of Wood Gundy Inc. in Toronto. ``The country is heading into a mild recession brought on by the fiscal policies of the federal government aimed at holding down inflation and lowering the budget deficit.''
Total trade between Canada and the US is approaching $200 billion in goods and services this year, the largest amount of commerce between any two nations. The tariff cut speed-ups cover more than 500 products. That is about 10 percent of the initial requests for faster lowering of barriers by the industries of both nations.
Here are the companies affected by layoffs:
Canadian Airlines International announced 1,900 layoffs. The company says it is a result of its merger with Wardair in October.
Ford Motor Co. of Canada will lay off 900 workers and shut one its three engine plants in Windsor, Ontario, by December of 1990. The plant was built in 1922 and will be torn down after it closes.
Gerber (Canada) Inc. will close its baby food plant in Niagara Falls, Ontario, next April and move to the United States. It will put 150 people out of work. The company says it is more efficient to operate from the American plant.
General Electric Canada Inc. will close its Montreal lamp factory by July of next year, putting 200 people out of work.
Burlington Canada Inc. closed its plant in Brampton, Ontario, laying off 450 people. It too is moving its production to the United States.
Inglis Ltd., an appliance manufacturer, is closing its Toronto plant with the loss of 550 jobs. The Canadian market will be supplied by its parent plant in Ohio, owned by Whirlpool Corp.
Indal Inc. and PPG Canada Inc. will close a joint venture company next month, putting 240 people out of work. The firm made insulated glass, but demand was lower than expected.
Abitibi Price Inc. is laying off 250 workers at its newsprint mill in Grand Falls, Newfoundland, because of falling newsprint prices and the rising Canadian dollar.
Although many critics are quick to blame the free trade agreement for the thousands of lost jobs, economists point to other factors, including the Canadian dollar which is worth almost 86 cents American, up 12.6 percent in two years.
The high value of Canada's dollar is hurting exporters. The Canadian Export Association estimates that every one cent rise in Canadian dollar means a loss of $1.3 billion (Canadian; US$1.1 billion) in exports for Canadian firms.
But unions are convinced free trade is the culprit. The Canadian Labour Congress through its Trade Watch Bulletin says the Free Trade Agreement is responsible for the loss of 60,000 Canadian jobs this year.
Even some businesses admit free trade was a factor in moving. The President of Burlington Canada, Jack Moon, said both free trade and higher Canadian wage rates were a factor in moving the Canadian operation back to the United States.
Tariffs on carpets were 20 percent but are being cut to zero over 10 years. ``We are in an industry that was protected by tariffs,'' said Mr. Moon. ``And somewhere in the next 10 years we wouldn't have been able to compete.''