Canada’s auto heartland is bleeding jobs and poised to decide the election

(Bloomberg) — Canada’s election has become a referendum on which leader can guide the country through the biggest economic risk it has seen in decades. Voters in the manufacturing centers of Ontario, who are now living on the front lines of the trade war, are poised to play a key role in deciding who is crowned.

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The ring of cities and towns around Toronto is always important to winning elections in Canada, but US tariffs have supercharged this race. Many voters had been leaning toward the Conservative Party after weathering inflation and other frustrations under Justin Trudeau’s Liberal government. But Trudeau is gone and now President Donald Trump’s threats to their livelihoods dominate the public debate.

Stewart McLaren owns one of the many manufacturers in this region that have been battered by chaotic US trade policy. In early February, the US president signed an order to put 25% tariffs on most of what the US buys from Canada. For McLaren, who had been glued to his phone awaiting the news, it was a brutal day but at least it was a clarifying decision. “I just said, ‘OK, it’s on. It’s for certain.’”

McLaren’s company, Almac Industrial Systems, builds conveyor belts and other automated systems for handling materials, and has a separate operation that makes roll-up doors for trucks. He employs 85 people in Aurora, Ontario, which is a short drive north of Toronto and home to auto parts maker Magna International Inc.

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Half of Almac’s customers are American and it sources many of its materials from the US. Months of uncertainty have forced numerous clients to postpone or cancel orders, and shifting customs rules have created countless headaches. Sales are down by 50% and he had to lay off some contract workers last month. “It’s been miserable.”

Trump delayed and partially walked back the February tariffs, then put new ones on steel and aluminum products, followed by still more tariffs on April 3 on foreign-made autos. Canada has retaliated with counter-tariffs on tens of billions of US-made products, adding to the uncertainty that’s whipsawing the economy.

In March, Canada suffered the biggest job losses in more than three years, and the unemployment rate in the Toronto region surged to 8.8%.  For McLaren, election day can’t come soon enough. “We need somebody in charge.”

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Southwestern Ontario is home to five of the top 10 cities in Canada that are most vulnerable to the impact of tariffs, according to an analysis by the Canadian Chamber of Commerce. The region includes vehicle-assembly plants owned by global automakers such as General Motors Co. and Toyota Motor Corp., auto parts and other advanced manufacturing facilities, and steel and agricultural industries that together account for a sizable chunk of Canada’s exports to the US.

A few months ago, the Conservatives, led by former cabinet minister Pierre Poilievre, appeared poised to scoop up dozens of seats in this part of Ontario on the way to winning power in Ottawa. Polls suggest the Liberals, with new leader Mark Carney at the helm,  have turned that around: Opinion tracking by Nanos Research has them about 8 points ahead in the province, which accounts for around 35% of seats in Canada’s House of Commons, most of them in the densely populated south. If that holds up on voting day on April 28, Carney is nearly certain to stay in the prime minister’s office.

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There was a real desire for political change when Trudeau was still Liberal leader, said Saylo Lam, president of injection mold manufacturer Circle 5, a 125-person operation based in the border city of Windsor, Ontario, which is deeply to tied to Detroit’s auto sector. The calculus began to shift when Carney, the former financier and governor of two central banks, took over in March.

“He’s a savvy banker. He’s well-connected in the world. His international pedigree and his days at Goldman Sachs may give him an edge over Poilievre with respect to getting an international alliance to fight the bully,” said Lam. Still, he’s not yet decided who he thinks can best lead the country in the new economic reality. “I think I represent many voters. With uncertainty, there’s indecisiveness.”

In the twin cities of Kitchener and Waterloo, about a 90-minute drive southwest of Toronto, local business groups are returning to a crisis playbook first drawn up during the pandemic. About a quarter of the area’s economy is based on manufacturing, said Ian McLean, chief executive officer of the local chamber of commerce.

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The chamber and other organizations have banded together, as they did during Covid. They’re holding weekly information sessions with experts, planning a trade show for the region and creating a database of who makes and does what, so that businesses can find alternatives for everything from a certain type of screw to a local millwright who can repair a complex industrial machine.

“There isn’t anyone in Canada who doesn’t think this is the most ridiculous thing they’ve ever seen, but that and a buck-twenty-five gets you a coffee at Tim Hortons,” McLean said of the trade war. “We can gnash our teeth and say it’s crazy — all of which is true — but that’s not going to solve the immediate problem we have.”

When it comes to the election, he said, “Anyone across the political spectrum that I know here — they may have been worried, and to some extent they still are, but they’re really pissed off now.”

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The local business community wants to hear from political leaders about how they plan to address internal barriers to trade between Canadian provinces, reform corporate taxes and help companies find new markets, McLean said, adding: “I don’t think anybody is going to accept any sort of weakness as it relates to how we respond to the US.”

Twenty minutes down the road in Cambridge, Alain Roy has been run ragged. He owns Royal Pattern, a small mold-making shop he took over from his father, and has spent long hours at night revising customer quotes that used to be valid for 30 days. Now, with the cost of materials in flux and rising, he can only guarantee them for 24 hours.

“If I have to pay to bring something across the Canadian-American border and then ship it back, we’re getting zinged in both directions.”

Roy’s not sure either Carney or Poilievre is offering what he’s looking for — primarily, answers to how they plan to pay for all their promises. And the choice of who to vote for is weighing on him, he said. “I have to make the right decision based on my family, my children, obviously my team that work for us and our business. I have a lot to consider.”

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Winning Southwestern Ontario

Campaign buses criss-crossed Ontario in the days following the election call, underscoring the region’s importance as the parties made dueling announcements aimed at wooing manufacturing workers.

Poilievre visited a Kruger Inc. factory in Brampton, just outside Toronto, on the second day of the campaign. Surrounded by employees from the packaging facility, he said he’d cut taxes for average workers and pledged to “bring home our jobs so that we can confront Donald Trump and the Americans from a position of strength.”

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Two days later, Carney stood at a podium next to the Ambassador Bridge, which connects Windsor and Detroit, promising a C$2 billion ($1.4 billion) fund to help auto manufacturers and to work on building an “all-in-Canada” network for auto parts — without giving a lot of detail on how that would work.

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The pair are locked in what is mostly a two-party race after a dramatic collapse in support for the New Democratic Party, a left-leaning group that was once the political home of the labor movement. As Washington’s trade attacks made the election about more than just the cost of living, the Liberals have also seen a boost as polling data show many of their supporters believe Carney is the best option to stand up to Trump.

“The Conservatives have lost some support, but they’ve mostly held onto their base,” Shachi Kurl, president of the Angus Reid Institute, said in March. Her firm’s polling data shows the Liberal Party more than doubled its voter support in southwestern Ontario over the past three and a half months, scooping up NDP supporters.

“I think the Conservatives still lead on the pocketbook conversation,” said Oksana Kishchuk, director of strategy and insights at Abacus Data. But the party’s had a hard time formulating an effective response to Trump, she said, particularly the president’s comments about making Canada the 51st state. If Trump backs off on such musings in the next few weeks, the momentum may swing back toward the Conservatives, according to Kishchuk.

Back in Aurora, McLaren said he finds it hard to get past disappointment in the Liberals after nine years of the Trudeau government, an era that culminated with a power vacuum just when a strong leader was needed most. “I think it’s time to give the other guys a shot,” McLaren said. He’ll vote Conservative, but he still thinks the election result will depend on how Poilievre’s party plays its hand. “Carney’s a hard guy to beat.”

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