Mark Milke, Research Director, Frontier Centre for Public Policy
According to the Chinese calendar, 2009 is the year of the ox.
But North Americans might be mistaken for thinking it's actually the year of the pig, and not because of the swine flu; the four-legged pink animal is a more appropriate mascot, given how many companies and sectors have wiggled up to governments to ask for aid in this year alone.
The list is almost endless, ranging from the brazen --the U. S. porn industry when represented by Larry Flynt who was at least half-joking - to the reckless --major players in the U. S. financial sector - to the predictable - the automotive sector, which has sought taxpayer money in both good times and bad.
As to the automotive industry, it's worth recalling the public dollars already sent to auto companies even before the financial meltdown. Their time at the public trough is not a recent phenomenon.
Between 2004 and 2008 alone, more than $750 million was sent to Canada's automotive sector from the federal and Ontario governments in the form of grants or "repayable" contributions, the latter often being anything but. Chrysler received $123 million; Toyota-- profitable though it was until this year - received $125 million; General Motors took home $200 million, while Ford garnered $280 million. The rest was spread among more minor players.
Now in a recession, two of the Detroit three have asked for and received billions from both the U. S. and Canadian governments. Thus, Chrysler (with $3 billion from our own Canadian government this past week for a two per cent stake in the company) and General Motors serve as useful but expensive case studies in the folly of intervention by Washington, D. C., or Ottawa.
Dennis DesRosiers, an auto industry consultant who tracks the numbers, points out that automobile sales in March in Canada were down by 15% from the same month in 2008.
The declines ranged from a mild 3% drop in Quebec, to a dramatic 31.3% drop in both British Columbia and Alberta.
The March figures understate the magnitude of the decline. In the first quarter of 2009, automobile sales in Canada were down to 284,000 from 364,000 in the same quarter last year; that's almost a 22% decline in year-to-date sales relative to 2008.
Which auto companies have suffered the most in sales declines, but in Canadian and the US? The former Big Three.
Total North American automobile sales reached a peak of 20.3 million in 2000, declining to just over 16.1 million last year. Forecasts for 2009 are for 12.7 million unit sales with a slight recovery next year, hitting 19.6 million in new automobiles sales in 2013.
The 2013 numbers are probably optimistic. What's interesting is that the Detroit/Ontario Three are losing market share even faster than the general decline. This becomes evident from looking at the share of union-produced vehicles.
Desrosiers' calculations reveal that in 1995, 79% of all new vehicle sales came from a factory with either the United Auto Workers (the U. S. automotive union) present or the Canadian Autoworkers Union (CAW) on the factory floor.
