If tariffs were imposed on Canada by the United States it would bring the automotive industry “to its knees,” Linamar CEO Linda Hasenfratz said Tuesday as the auto parts giant announced a $1 billion investment in the province.
Vehicles won’t be built because customers would have to pay a huge cost for them. “This is on the automakers. They’re the ones that are going to have to suck up this cost. They can’t do it. They can’t afford it,” said Hasenfratz during a media question period at a provincial funding announcement on Tuesday. The U.S. can’t absorb the cost either, she said.
“In my opinion, if a significant tariff is imposed it’ll bring the industry to its knees,” said Linda Hasenfratz, CEO of Linamar.
Hasenfratz thinks it won’t take long for production to stop and for it to put pressure on the U.S. administration to reverse the tariffs. The focus should be on how the continent can do more together instead of thinking “how do we destroy the industry that we have,” she said.
During her remarks she explained auto trade between Canada and the U.S. is well-balanced, citing $79 billion in exports from Canada and $82 billion in imports in the U.S.
In the media question period Hasenfratz explained how intertwined the auto industry is between Canada, U.S. and Mexico since between these countries there are supply chains that cross borders multiple times.
There is a part that makes six border crossings between the three countries. "So you can imagine the cost implication of having any level of tariff. I don’t care if it’s one per cent, two per cent, let alone 25 per cent on the industry,” said Hasenfratz.
Despite looming tariff threats from the U.S. government, Linamar announced plans Tuesday to put $1 billion towards expanding its operations in the province by adding more jobs and making more components for electric vehicles.
To support Linamar the provincial government will be giving $100 million. The federal government will contribute up to $169.4 million.
Through the $1 billion, Linmar expects to generate $1.5 billion in sales. The investment is expected to create 2,300 jobs in Guelph and other municipalities in Ontario.
To be competitive and flexible in the market Linamar is creating parts for hybrid, electric, fuel cell electric and internal combustion vehicles.
Federal minister of innovation, science and industry, François-Philippe Champagne, is happy Linamar is looking into semi-conductor packaging. He said 80 per cent of all semi-conductors are manufactured in the U.S. and are packaged and tested in Canada.
When the previous U.S. government put in the Inflation Reduction Act “it put a chill on business right across Canada.” said Vic Fedeli, Ontario minister of economic development, job creation and trade. He thinks the tariff threats will have the same effect. The act provided tax credits for renewable energy and hydrogen production.
Looking ahead Fedeli thinks Linamar’s investment will further the development of the automotive supply chain and making parts used for any vehicle whether it's an electric or hybrid is its “secret sauce.”
Guelph MP Lloyd Longfield said he, Mayor Cam Guthrie and MPP Mike Schreiner called on the Guelph Chamber of Commerce to bring local manufacturers together. They spoke about being aggressive with plans going forward. This approach would help Canada “be counted in the supply chain of the future, the future global supply chain, which includes the United States and we as a government need to be flexible,” said Longfield.