Ford Canada announced in April that it would postpone all electric vehicle production at its Oakville assembly plant in Ontario by two years until 2027 due to “softening demand,” meaning that people aren’t buying EVs because their price is too high. “We are committed to scaling a profitable EV business, using capital wisely and bringing to market the right gas, hybrid and fully electric vehicles at the right time,” Jim Farley, Ford president and CEO, said in a press release. Farley acknowledged that the delay would have an impact on workers at the plant, and insisted the company is still committed to producing electric vehicles in Oakville. “We are fully committed to manufacturing in Canada and believe this decision will help us build a profitably growing business for the long term.” said Farley. Why should we be surprised? Capitalism and profitably growing a business is what it’s all about.
Transition support
The Ford workers are represented by Unifor whose national president, Lana Payne, criticized Ford’s decision as being “incredibly disappointing,” focusing on two elements: first, the timing — in contract negotiations just a few months ago, Ford gave no sign it was planning to push back the Oakville launch from 2025, a date it first agreed to in 2020. Second, during contract negotiations, Ford had agreed to provide “transition support” to workers while the Oakville plant was being retooled to produce EVs. That support — a payment in addition to EI — would bring most workers to roughly 70 percent of their usual pay. The length of payouts is based on seniority, with those workers with 20 years’ experience getting payments for up to 2 years. Workers with one to three years on the job can expect supplementary support for just 9 months.
Now that the company has pushed the timelines back by two years, Payne argues the very least it can do is provide that support until 2027. “We expect those transition supports to be in place for the entire transition,” said Payne. Unifor Local 707 chairperson, Marc Brennan, was also critical of the delay, saying it means Ford won’t be producing any vehicles in Canada once production of the Ford Edge stops in Oakville later this year. “It is unacceptable, after 120 years of operation in this country, that Ford does not plan to build a single vehicle in Canada for years on end.”
What does just transition mean?
The term “just transition” has been used in the climate movement since the 1980s, and more recently by governments to describe the attempt or the aspiration to move away from environmentally harmful practices such as building and driving fossil fuel vehicles towards greener, more sustainable alternatives. A search of the internet for “just transition” gives the following mumbo jumbo: “Facilitating inclusive and participatory decision-making through Multi-Actor Partnerships.” What does this mean? The key element is that the workers who are “transitioning” from the old to the new jobs should not lose out in terms of wages and benefits. And if there is a question of losing out, compensation/wages top up should come from the former employer and/or government. The news from Oakville shows that this isn’t happening. And the news about the delay came as a shock to both Federal and Ontario governments. Indeed, they should be shocked. In 2020, the Feds announced it was providing $295 million to help Ford transition its Oakville plant to EVs. “We will ensure that the interests of the workers at the plant are protected,” said a Fed spokesperson. The Ontario government, another donor of $295 million to Ford, is also concerned about worker protection. Of course, it’s not just the Ford workers who need protection. The decision will also have an impact on parts manufacturers and their workers who were counting on supplying the Oakville assembly plant. And it’s not just Ford. Industry analysts are expecting more decisions like this — from other companies and in other jurisdictions. People are getting payment fatigue right now, and EVs are more expensive to buy and repair than gas vehicles.
A genuine “just transition” requires workers’ control of the transition process, based on public ownership of the factories.
A green initiative?
The transition to EV production by the auto companies is often touted as business behaving responsibly and doing their bit to combat climate change. Ford’s actions expose their commitment to “green” initiatives as a myth; their actions are merely an attempt by the auto industry to save itself and ensure bigger profits and in the process, carry out far reaching attacks on workers’ jobs and living standards. The day before the Ford announcement, shares in Tesla plunged by more than nine percent after the EV manufacturer reported first-quarter vehicle deliveries were 64,000 below expectations. Tesla added to the gloom with a further announcement that it was slashing ten precent of its workforce.
In a research report after Tesla’s announcement, a JP Morgan analyst slashed his price target on the company’s shares to US$115 from $130. He wrote, “We caution Tesla shares could fall much further still should the company not be successful in quickly restoring unit volume and revenue growth, lest investors elect to no longer assign the stock its still hyper growth company valuation multiple.”
It is likely that hundreds of thousands of jobs across the current global production and supply chain will be destroyed by auto companies, with fewer labour hours and parts needed to produce each vehicle. Their aim is to use EV production as an opportunity to boost shareholder profits at the expense of autoworkers.
An alternative
EVs are falsely presented as making a significant contribution to reducing global carbon emissions. The government money to subsidize EV production could be better used. Massively outdoing governments’ subsidies of Ford’s EV, there is the $35.5 billion that the Federal, Ontario and Québec governments are handing out to Stellantis, Volkswagen and Northvolt for their EV projects. The Parliamentary Budget Office estimate that the total subsidies are worth $43.6 billion! There are many ways to spend the billions that would have a bigger impact in reducing climate change, improving life and providing more good jobs.
Here are some suggestions:
- There’s the long-considered, dedicated high speed (300 km per hour) electric rail service on the Windsor-Québec City corridor. There have been many studies with differing costs for different parts of the full route. It would drastically reduce travel times and shift passengers from cars and planes to much more energy efficient trains. It would also reduce car use within the cities connected. A 2011 study put the cost of the full route at $21.3 billion — updated for inflation, that is $28 billion.
- $35.5 billion would be enough to install a 7.5 kW solar system in 1.6 million homes.
- LED lights drastically reduce energy use. By 2027, widespread use of LEDs could reduce the country’s electricity use equal to the annual electrical output of 44 large electric power plants, and lead to total savings of more than $30 billion. Spend money to save money!
- To meet climate and affordability goals, most Canadian homes and buildings will need extensive renovations to be more energy efficient and use clean energy. The government’s Greener Homes Grant, capped at $5,000 per home, has ended as it was oversubscribed. The modest sum of money was grossly inadequate to get homes to near zero emissions, and it only covers homeowners. The government is talking about another scheme, but it too will be inadequate. Socialist Alternative supports covering the full costs (which can be up to $100,000), especially for low-income households and expanding the current system to upgrade rental units. Some cities and provinces also provide support. If the gift of $35.5 billion to the auto companies was re-directed to housing, up to 1.85 million homes could be upgraded.
- For $35.5 billion, Canada could build over 140,000 units of affordable housing units (average cost ~$250,000).
It’s the crazy, anarchic capitalist system that gets in the way of the many alternative ways to protect the environment and provide good jobs. Socialist Alternative offers a real alternative in our fight to put an end to capitalism and bring about a genuinely green and sustainable world. Join us!
