A whopping 582,000 direct and indirect jobs would be lost in Canada over the next five years if the ailing Big Three US auto makers shut down their Ontario operations, said a study Tuesday. If output is reduced by 50 percent, 296,000 jobs would be lost nationally, said the 11-page report prepared for the Ontario Manufacturing Council. "The economic consequences of either a partial or total shutdown of the Detroit Three are stark," said the report. "Either scenario is sufficient to push Ontario into a deep recession while the nation may barely escape one in the 50-percent reduction scenario."
Initial job losses of between 157,000 and 323,000 at assembly plants, parts manufacturers and others, depending on the scenario, would rise to between 296,000 and 582,000 by 2014, said the report. The job losses would continue to mount after the first year because a weaker economy would depress investment, discourage immigration and half new housing construction, leading to a negative economic spiral.
The auto sector and parts industry employ roughly 219,000 Canadians nationwide. The Big Three directly employ about 34,000 workers while overseas car makers employ just under half that number.
On Friday, the Canadian and Ontario governments reached a tentative deal for a 3.4-billion Canadian dollar (2.8 billion US) bailout of Chrysler, General Motors and Ford's operations in Ontario province. But a payout is contingent on Washington's approval of a 14-billion-dollar US aid package.
"If we think that the extinction of the auto industry is a national economic evolution, this report says that is a mistake," said Ontario Economic Development Minister Michael Bryant. "We won't let that happen because of the catastrophic effects that are laid out in this report," he said, describing the demise of Canada's auto sector as "the economic equivalent of a nuclear freeze with catastrophic effects that would knock us into a deep recession."