Auto Industry in Canada

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To fully understand why Canada is one the wealthiest nations in the world, we need to pay particular attention to Canada’s economic history. The economic history of our country has been marked by many important events that have paved the way for a successful economic future. A brief economic history of Canada would pay particular attention to important events such as the economic boom of the 1920s, the dark times of the 1930s; the Second World War during the 1940s and to also not forget the important trade agreements such as the auto pact and the NAFTA. Despite the above mentioned important events, Canadian economy has also been greatly influenced by its own economic sectors. Our economy has undergone through major changes during the past 3 decades. One of the factors that had an enormous impact on the economy of Canada has been that of the automotive industry. The automotive industry was born in the early years of the 20th century and it has since then, expanded very quickly. (White, 2007, p.3) The expansion has proved to be economically profitable and also unsuccessful at times. This essay will examine the economical and political impacts of the auto industry in Canada during the past years, by paying special attention to the economic regional imbalance, the auto pact, the North American Free Trade Agreement and also the shift in the Canadian auto market, from American automakers to the Japanese automakers during the past three decades. The automotive industry expanded Canada’s economy by increasing the employment levels, the improvement of roads and contributed to an increase in revenues due to licences and gasoline fees. It also strengthened the economical relationship with our neighbours to the south and has also improved the economy of the southern provinces as it is heavily concentrated in the province of Ontario with major assembly plants in Windsor and Oshawa. The first car was produced in 1888 by Karl Benz in Germany, where as in Canada “commercial production did not being until after 1900” (White,2007, p.5) Many Canadian automakers tried their luck but only some succeeded, as the automobile market in Canada was overtaken by the United States in the early stages of its production. It is very important to understand that the beginning of the automobile industry is closely connected to that of the United States. Many people link the creation of the automobile industry in Canada with the American automaker Ford. The design of the American automakers is entirely different from that of the Europeans and this was set early in the history of the car production. The Germans and the French build quality and modern cars which could only be afforded by the rich, where as the Americans were faced by an economic dilemma therefore they build cars that the public at large could afford, at a cheaper quality than the Europeans. As White states in the 1920s the industry hit its stride, expanding such that Canada became the second-largest producer of automobiles in the world.” (2007, p.v) The automobile changed many aspects of the lives of Canadians. The car gave Canadians the leisure they didn’t have before the 1920s. Now they were able to travel long distances comfortably, to find jobs far away from home as now it was easier to get to work. The automobile also allowed for the construction of the hard surface roads. Norrie at al states that by the 1928, there were 8600 km of concrete or macadamized roads in the province (2008, pg.289) As the number of cars per person increased so did the number of licensed vehicles in Canada. Norrie et al states that by 1923 the number of automobiles in Canada had risen to nearly 1.2 million (2008, p. 288) Employment rates were steadily rising with the rise in the number of manufactured cars in Canada. The opening of big plants throughout Canada in cities such as Windsor and Oshawa closely contributed to higher employment rates. In 1920 the average number of employees in the automobile...
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