Industry Canada and Automotive Restructuring, Andrew Graham (2011)
… from the Atlas collection of Cases
An open access resource from the IPAC Case Study Program
Prepared and Edited by Andrew Graham (see pdf on right; material below is directly quoted from the pdf).
This case shows how an organization, in the face of a compelling policy imperative, huge time constraints and a crowded field of players, was able to deliver on the government’s direction. Using a matrix approach, the organization was able to mobilize players within governments and the private sector to take action. In short order, governance was established and adjusted as the issue unfolded. Needed external resources were secured and integrated into the project. Keys to success were the capacity to operationalize working networks, quickly gear up project management and control and work across jurisdictions and sectors without creating resistance. The principal lessons learned focus on the role of governance as a key part of project response, the readiness to find and use the right resources (even if not within the Department), managing within compressed and pressurized time frames, relationship-building on the run and the need for communication loops in fast-moving situations.
A Force 4 Gale
The crisis was about as global as you could get. The stakes were high. Time was compressed. The challenge crossed jurisdictions at home in Canada and went viral around the world. This was the automotive crisis of 2008-2009. A sub-set of the global meltdown, this one struck at Canada’s industrial heartland – its automotive industry. A major crisis confronted the government. A response was needed. As one official who had recently arrived in Industry Canada said, “It was like a wall had hit you.”
This case study is about how Industry Canada rose to the challenge of putting together a rescue package that was announced in 2009 for both General Motors and Chrysler. The focus of the case is how one Branch – the Automotive and Transportation Industries Branch (ATIB) – was able to create a response team that integrated the efforts of the Governments of Canada and Ontario and worked closely and in parallel with the Government of the United States to address the crisis that was playing out in both countries. The response involved growing the Branch rapidly, importing skills and knowledge specifically needed for this complex task and effecting an integrated response to serve the government’s needs for sound analytics as well as global connectivity with partner governments, unions, major financial institutions and the auto industry.
The automotive industry is a huge part of Ontario’s industrial heartland. It was greatly affected by a global turndown in car sales in the years running up to the recession. Sales of new vehicles in the United States – to which the Canadian manufacturers are closely integrated – dropped in 2008 from an average of 15 million to between 9 and 11 million through 2009. The dramatic decline in demand caught the major manufacturers off-guard. The decline in sales in Canada was not as steep, but the percentage decline was still in the high teens during the same period.
More importantly, this crisis exposed the underlying weaknesses in the North American auto industry, problems of competitiveness and profitability that had plagued the industry for years.
It was well understood that there was significant overcapacity in the industry. Further, product quality was not matching off-shore competition.
What Were the Risks?
Effective response was essential. So too was the right timing. Some of the risks faced during the effort were:
- Loss of Canadian share of the automotive industry, thereby accelerating a job- loss spiral already under way;
- Confusion and delay among the Canadian players that would remove effective control to the United States;
- Loss of synergy with the American response;
- Complexity and time: this situation demanded that various forms of expertise be quickly brought together to meet the government’s direction and refine it into action – financial expertise (both within government and the private sector), legal advisors, industry expertise, communications expertise and diplomatic resources;
- Policy complexity: the governments on both sides did not want to see the industrial giants go down, nor did they want the status quo to persist; and
- The number of high-level stakeholders: this included the U.S. and Ontario governments, the auto manufacturers, the rest of the auto industry, the unions on both sides of the border and the financial community….
Note on the Series: This case study has been developed as part of an “organizational learning” case study series through the IPAC Case Study program. The cases from this series are prepared in conjunction with partners across a variety of governments, with a strong focus on the many activities of the federal government. We thank all those departments and ministries that have agreed to share their insights and experiences for the benefit of others. Each case will consist of the case itself and a short teaching note with ideas for uses and themes that the case suggests. Within the body of the case will be a series of lessons learned, based on the observations of those interviewed, written material and the insights of the case author and editor. All cases are prepared by a researcher/writer and then edited. The research is based on published material and interviews with those who had been involved with the case. All interviews are treated as confidential and all quotations arising from them are not attributed to an identified individual.
Industry Canada and Automotive Restructuring, Andrew Graham (2011), IPAC Case Study Program, Institute of Public Administration of Canada, see https://www.ipac.ca/iPAC_EN/Programs_Services/Research/Case_Study_Program/iPAC_EN/Programs/Case_Study_Program.aspx.
Page created by: Ian Clark, last modified on 15 April 2018.
Image: Industry Canada and Automotive Restructuring, Andrew Graham (2011), IPAC Case Study Program.