COMMENTARY: Stein’s Law is cold comfort for those devastated by Oshawa GM news
Over and over again, during these last few turbulent years of history, I’ve often reflected on Stein’s Law. Herbert Stein was an American economist. That’s basically all I can tell you about him (his son Ben would be more familiar to millions). But Stein’s Law is something most people probably have heard of. And it is, “If something cannot go on forever, it will stop.”
You may be more familiar with the bastardized versions that float around — “Things that can’t last forever don’t” is the one I usually default to. But they all tie back into the fundamental truth that Stein was reaching for when he first penned Stein’s Law in a column for the Wall Street Journal: if something can’t last forever, don’t expect it to.
But people do expect it, of course. Their head knows better. Their hearts can’t quite accept it.
On Sunday night, apparently without any warning, reports emerged that General Motors is shutting down its remaining operations in Oshawa, Ont., sometime in 2019, after current orders are produced.
The GM presence in Oshawa is — was? — already a shadow of its former self. Reports say that 2,800 jobs are to be eliminated, part of a global restructuring of GM operations. Those 2,800 jobs are all that’s left of what was once a workforce of tens of thousands.
And even those relatively few GM workers in Oshawa have been obviously on the bubble for years. Canada is an expensive place to make automobiles, even if a low Canadian dollar occasionally helps take some of that edge off. Oshawa, in particular, has been a source of concern. Every GM car manufactured there could be transferred to another existing facility in lower-cost Mexican or U.S. jurisdictions quickly. That’s been true for years.
WATCH: Coverage of the GM Oshawa plant closure
Indeed, more than two years ago, Kristin Dziczek, director of the industry, labour and economics group at the Center for Automotive Research in Ann Arbor, Mich., told the National Post‘s Kristine Owram that “I have not seen any professionally produced forecasts that have any continued production at Oshawa beyond 2019. This is the plant that everybody’s worried about.”
But life kept on — if not quite as normal, then at least as something resembling normal. Every round of negotiations that kept operations in that Greater Toronto Area city alive for another few years, even with reduced staffing and lines, was welcomed with relief: another contract signed; another bullet dodged; something that cannot go on forever would go on a little bit longer.
But the GM operations weren’t going to go on forever. So they’ll stop.
It’s hard to exaggerate the damage this will do. The 2,800 jobs that are set to be lost are bad enough. But the loss of the GM jobs will have a massive impact on Oshawa’s economy, one far beyond the eliminated positions. Thousands of other workers in Oshawa, though not in GM jobs, were dependent on GM’s operations. Thousands more were sustained by the money those jobs fed into the local economy. Communities all around Oshawa, hours away by car, will feel this pain.
I’ll leave it to the economists to bicker about how precisely to quantify the damage. And we can’t ignore the prospect of the government stepping in with some plan or another to minimize the damage. A year out from an election, you’d be insane to expect anything else.
But on Sunday night, there wasn’t much of that yet. The politicians were stuck expressing concern in public while presumably frantically scrambling for answers in private.
On social media, as word spread, sympathy for those families to be hit by this seemed to be running roughly even with the usual banal partisan sniping. Justin Trudeau was being pilloried as the man responsible for this obviously predictable development. Stephen Harper, too, was coming in for criticism, mostly on the grounds that his 2008 crisis-era bailout of Chrysler and GM’s Canadian operations was somehow supposed to guarantee work forever, like some kind of perpetual motion jobs machine.
WATCH: Oshawa MPP Jennifer French’s reaction
People are shocked, Stein’s Law notwithstanding. Anyone with roots in the GTA has some link to the auto sector here. It doesn’t have to be all that close — certainly, my family doesn’t have any direct links. But we, like everyone else, know people who were raised by autoworker parents and raised comfortably.
You have parents or grandparents who’d only ever buy Big Three North American because they understood how good those jobs were to so many. Autos aren’t quite to Toronto what oil is to Calgary, but it’s probably about as close as we come. In this town, in this province, it’s the industry — or, at least, we still feel like it is.
We aren’t the only one who knows this. During the seemingly endless NAFTA negotiations, you could feel Ontarians collectively shudder at the reports that U.S. President Donald Trump was musing about hitting Canada with auto tariffs if we didn’t reach a deal the U.S. could live with.
“I don’t want to do anything bad to Canada. I can — all I have to do is tax cars — it would be devastating,” he said in the summer. Trump was also reported to have said privately, “Every time we have a problem with a point [with the Canadian negotiators], I just put up a picture of a Chevrolet Impala.”
Chevrolet is owned by GM. GM made its Impalas in Oshawa. Not for much longer, it seems. What the president viewed as his trump card — no pun intended — has come to pass on its own, just months later.
It’s shocking. It’s horrible for the people impacted. It’s an economic disaster and a political crisis. There’s still a chance, one supposes, that GM will be offered some incentives — cash — to keep some operations in Oshawa. Perhaps to double down on some of the high-tech investments Ontario is already working to attract in the emerging field of autonomous cars.
But if not, it’s just Stein’s Law in action. And even if a reprieve is granted, Stein can wait. Sooner or later, he’ll be proven right.
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