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July 15, 2005

Toyota Votes with Its Feet for the Canadian Model

Brayden King observes Toyota voting with its feet for the Canadian rather than the American model:

Pub Sociology: More concern about the costs of employing U.S. workers: Via the apostropher and Blog on the Run, I found this story about a new Toyota plant being built in Woodstock, Ontario... despite the offer of millions of dollars in subsidies to put the plant in the U.S.... Toyota is tired of training ignorant (i.e. illiterate) American workers, and the second is that in the long run it's cheaper to operate in Canada because of the reduction in corporate health care costs.

Industry experts say Ontarians are easier and cheaper to train - helping make it more cost-efficient to train workers when the new Woodstock plant opens in 2008, 40 kilometres away from its skilled workforce in Cambridge. "The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association....

He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment....

In addition to lower training costs, Canadian workers are also $4 to $5 cheaper to employ partly thanks to the taxpayer-funded health-care system in Canada, said federal Industry Minister David Emmerson.

"Most people don't think of our health-care system as being a competitive advantage," he said.

...Universal health care might not be the anti-business gateway to socialism that some on the right want you to believe.... Other countries increasingly have a comparative advantage in production industries because their workers are better trained (or at least as well trained) and less costly.... [P]art of the U.S. disadvantage comes because the standard of living in the U.S. is so much higher... but if we offer a superior level of human capital we should be able to find a niche... when even that advantage begins to deteriorate (AND health care costs serve as a disincentive), we should be worried.

Posted by DeLong at July 15, 2005 11:18 AM