MISSISSAUGA, Ontario — Thanks for the help. We need more.
That´s the message from Canada´s manufacturers, including the Rubber Association of Canada, to recent initiatives by the nation´s government to promote manufacturing in the country.
Prodded by a group of 34 Canadian manufacturing associations, Canadian Prime Minister Stephen Harper´s government recently responded with a two-year accelerated depreciation plan to help manufacturers.
Good, but not good enough, according to Glenn Maidment, president of the RAC.
"It may help people who already have plants in place," the official said. "But for most large companies, most capital projects take three to five years, so a two-year cycle is just not sufficient."
Tax rates, accelerated depreciation-these are some of the issues that are common to Canada and its NAFTA neighbors to the south. Still, Maidment said in an interview at the association´s headquarters in Mississauga, there are other issues that are uniquely Canadian.
Canadian trade, Canadian currency
The U.S. is and always will be Canada´s biggest trading partner, and for the most part this is a boon to Canadian rubber manufacturers, according to Maidment.
"The U.S. market is the biggest and most free market anywhere," he said. "You can appreciate that when you trade with countries other than the U.S."
Major tire manufacturers such as Goodyear, Bridgestone/Firestone and Michelin have fully integrated their U.S. operations with their Canadian facilities, creating a whole North American market, Maidment said. "Having that here in Canada is one of the strongest benefits in our relationship with the U.S.," he said.
Despite recent closures, such as Michelin´s shutdown of a plant in Kitchener, Ontario, the North American Free Trade Agreement has been good for the Canadian rubber industry, especially in terms of allowing capital investment, according to Maidment.
"Well in excess of $1 billion has come into the Canadian market because of NAFTA, and that´s all to the good," he said.
The rise in the Canadian dollar against the U.S. dollar, however, hasn´t been so good for the Canadian market.
"The big issue isn´t so much the relative value between the Canadian and U.S. dollar," he said. "The biggest issue our manufacturers are facing is that the change has been so drastic and so quick."
Canadian companies that ship product to the U.S. and get paid in U.S. dollars suddenly are finding those dollars worth significantly less than before, Maidment said. Even worse, pricing parity between the U.S. and Canada has lagged behind the changes in the relative value of the currencies.
Retail goods in Canada are priced at about 82 cents to the U.S. dollar, even though the Canadian dollar was worth nearly $1.10 against the U.S. dollar in early November, Maidment said. As of Jan. 10, the Canadian dollar was nearly even with the U.S. dollar, at $1.01.
The Retail Council of Canada evaluates retail prices against U.S. currency every six to 12 months, according to Maidment. "Manufacturers aren´t sure what to do," he said. "Seeing all that, retail prices are coming down on a whole litany of products, but it takes time."
With the U.S. dollar newly weak against the Canadian dollar, a lot of U.S. tires and other products are coming into Canada, according to Maidment. "The U.S. market´s 10 times the size of the Canadian market," he said. "Now that U.S. product is coming into Canada, it´s very noticeable. It´s very difficult for Canadian dealers to compete with that."
Hands across the border
Having RAC members that operate on both sides of the border is helpful, Maidment said, and so are the RAC´s collaborations with the Rubber Manufacturers Association.
"They don´t lobby Ottawa, and we don´t lobby Washington, but we do have issues that cut across the borders," he said. The RMA and the RAC work together on a number of projects, such as rubber recycling and the "Be Tire Smart" program, and the groups have co-sponsored biennial rubber recycling conferences in Canadian cities.
There may be opportunities to do more in the future with "Be Tire Smart," Maidment said. "The RMA gave us that program to work with, and we built our own program accordingly," he said. In an agreement with the RMA, the RAC has a "Be Tire Smart" portal, BeTire Smart.com, on its Web site
The RAC also has good relations with the Tire Dealers Association of Canada and the Tire Industry Association, which represents dealers in about 65 countries but mostly in the U.S. and Canada.
"In July, Paul Hyatt (president of Superior Tire Inc. in Toronto and immediate past president of TIA) held a TIA board meeting in Toronto," he said. "(RMA President) Don Shea and I met with them. It was a very, very good experience, and kudos to Paul for inviting us. Any time the tire manufacturer and dealer sectors can sit down and discuss each other´s issues, that´s best for both of them. We´ll never agree on all issues, but we´ll always work together.
The RAC will make available to TIA a winter tire video which will come out shortly from the RAC and Transport Canada, Maidment said. The video stresses the need to equip vehicles with four winter tires instead of two and demonstrates the side-by-side performance of vehicles equipped with four winter tires compared with two winter tires or with all-season tires.
That video will also be available in both French and English versions on the BeTireSmart.com Web site, Maidment said.
Some of the common issues between the RMA and the RAC may prove especially problematic in Canada, such as the move toward radio frequency identification devices in the tire industry. Ralph Warner, RAC director of operations, addressed a recent RFID meeting in Washington about the legal problems with RFID that could arise in Canada.
"If tagging includes an individual´s information, release of that information must be only with that individual´s permission, under Canadian privacy laws," Warner said. "If it does not include personal information, it doesn´t require permission."
Scrap tire stewardship
Every province in Canada except one has an operating scrap tire stewardship-or management-program overseen either by the provincial government or an industry-led council. The operation of each stewardship program is essentially the same in every province, according to Maidment. The one exception is the most populous province-Ontario.
"Fifty percent of Ontario´s scrap tires are going to the U.S. for tire-derived fuel, and I think that´s outrageous," Maidment said. Recent news articles have depicted Ontario tire recyclers as complaining they find it harder to obtain tipping fees for the tires they accept. The problem, according to Maidment, is that industrial boilers and cement kilns often pay for the tires delivered to them.
"If you want scrap tires in Ontario, you can get them, but you have to pay for them," he said.
A new Liberal government took the reins of power in Ontario this past October, which provides an opportunity for a tire stewardship plan to move forward, Maidment said. However, other recycling issues take precedence in the province, such as a standard for household hazardous wastes and a review of Ontario´s Waste Diversion Act, he added.
Maidment has met with the new Minister of the Environment about an Ontario tire stewardship plan and said he will follow up on that meeting with a letter. Such a plan, he said, would help Ontario tire processors by giving them the right of first refusal for the province´s scrap tires.
Among other provinces, the stewardship program in Manitoba reached a crisis in October when Tire Recycling Corp., one of the province´s two tire recyclers, was forced to close its doors after the provincial government denied its request for an emergency $1 million loan. This prompted complaints about the program by Manitoba´s remaining recycler, Reliable Tire Recycling.
"It´s worked only on the backs of recyclers," said Brandi Wermie, Reliable Tire´s general manager, of the program.
Manitoba was in a unique situation among Canada´s provinces in its tire stewardship plan, according to Maidment. "They simply did not have and do not have a sufficient legislative structure in place to handle the cost of collection and recycling," he said.
As chairman of Tire Stewardship Manitoba, Maidment has advanced a new, industry-run structure for the province. The industry is in negotiations with the provincial government to transfer to the new plan on April 1, 2008, he said.