Q&A with CME president at the 2018 DEX Expo
Darby believes recently signed USMCA will be a win for Canadian manufacturing.
The keynote address of the president of Canadian Manufacturers and Exporters (CME), Dennis Darby, packed in attendees at Design Engineering Magazine’s annual DEX Expo this week. Given his position, Darby’s speech naturally focused on the recent USMCA deal that will effectively replace the 24 year-old NAFTA agreement signed back in 1994.
He spoke with an optimistic tone, noting that coming away with the status quo, in most regards, was a big win for manufacturers and Canada as a whole. We were able to ask Darby a few questions after his address, which you can find below. Note, the transcript has been edited slightly for clarity.
DE: It’s still early with USMCA having just been signed but what’s the general atmosphere at this point amongst CME members?
Darby: The first response we’ve gotten is one of relief in that we finally have some certainty. Even for a year, the current agreement stays in place and that alone should unlock a bit of investment and allow people to generate some long-term planning. The new agreement did nothing to make it worse. In fact, it enhanced a few things. So I think there will be a general recovery to a small degree. Part of that, especially in Ontario and Quebec, which are heavily driven by steel and aluminum, will be ultimately getting relief from those 232 section tariffs.
The agreement is overall positive, and it should enhance our ability compete in North America. The downside are those tariffs are a bit of a drag, especially in those provinces that depend on machinery and equipment.
DE: There’s a dichotomy between the automotive sector which saw a positive outcome from the agreement, and the steel tariffs which remain in place. How do we deal with these facets that share such a close relationship?
Darby: I think that the agreement was good in terms of providing reassurance and providing clarity for the automotive sector and the people who supply the automotive sector. The problem is the price of the inputs has gone up. It’s unclear at this point where it will balance out, but I think that we should take, at face value, the government’s commitment towards negotiating exemption for Canada. Because really, these tariffs should never have been applied to this country. There was no basis in fact that Canada would pose any kind of security threat to U.S industry. Canada is not the target; the target was third-party countries that dump into North America. Hopefully, cooler heads will prevail now that the USMCA has been signed.
DE: With the sense of relief stemming from USMCA do you believe any capital expenditure that was put on hold, will be reinvested back into the manufacturing industries?
Darby: Early indications are that people who had folders on their desk trying to decide wether to invest, those will go on. I think our fundamental competitiveness issues related to overall tax on capital and on business will still be a bit of a drag. But like you said earlier, it’s still a bit too early to say definitively.
DE: Section 19 (unfair trade practices) was kept in the agreement pretty much word for word. What are your thoughts on this remaining in the new deal?
Darby: I think it’s always been something that Canadian industry has relied upon. If you go back to the case last year between Boeing and Bombardier, a U.S court ruled heavily in favor of Boeing and the suggestion was that it may not have been a fair assessment. I think that very much is an example of why you need an independent dispute resolution. When there is an accusation of unfair trade practices, you need to go to an impartial panel, in this case a two-person panel.
At the end of the day Canada wanted it to be enhanced, and under CETA they did enhance it a bit and that’s where Canada started. And we said ‘Yeah, let’s copy what we did in CETA because it was more modern. The U.S. wanted to get rid of it but it ended up where we started, which is good. I don’t think it’ll be detrimental to the U.S. either. But it is important for Canada because we are a lot smaller and our industries tend to be smaller and when you get into a fight with the big dog, you want to have that protection.
DE: In your keynote address, you talked a little bit about CME’s women in manufacturing initiative. Could you expand on that?
Darby: It was a grassroots effort, started by some of the women on our board of directors last year, to try and get companies interested in talking about this. We did a study and it showed, as we all unfortunately know, women are underrepresented in the workforce. Those that are in manufacturing like it, but they know that it hasn’t got an attractive image.
We got such great feedback to the point where we got government funding to go and promote the value women in manufacturing have. We’ve been going to schools with the intention of show these young women what the manufacturing industries are like and the great job opportunities there. The days of swinging a sledgehammer and having this macho image are dead. Walk into any plant today and it’s all robotics.
We started in Ontario but now there’s a chapter in Quebec and they’re working on chapters in the West. The idea being to raise that awareness and basically get the local school boards to participate and understand why this is so important.