In a bold challenge to current industrial policy, Unifor is pushing the federal government to implement financial penalties against companies that relocate production outside of Canada, arguing that taxpayer-funded incentives should come with stronger obligations to maintain Canadian jobs.
The country’s largest private-sector union delivered this message to Ottawa last week during pre-budget consultations, warning that Canada’s manufacturing sector faces increasing vulnerability as companies receive generous government subsidies only to shift operations abroad when more profitable opportunities arise.
“We’ve witnessed this troubling pattern repeatedly,” said Lana Payne, Unifor’s National President, during a press conference in Toronto. “Companies gladly accept public funds during challenging times, then abandon Canadian workers once their balance sheets improve. This cycle must end.”
The union’s proposal comes amid growing concerns about Canada’s industrial competitiveness, particularly in the automotive sector where government incentives have become essential tools for attracting and retaining manufacturing facilities. Recent federal and provincial investments have included billions for retooling facilities for electric vehicle production, with Stellantis-LG Energy Solution receiving up to $15 billion for their Windsor battery plant.
However, these investments have failed to prevent other significant production losses. In January 2023, Stellantis eliminated a shift at its Windsor assembly plant, affecting approximately 1,800 workers. The company has also announced plans to end Chrysler 300 production, while General Motors is phasing out Chevrolet Bolt production at its Orion Assembly plant in Michigan, which employs numerous Canadian workers in the supply chain.
Industry experts point to a systemic problem: companies can accept public money without sufficient guarantees for long-term job stability. According to Statistics Canada, the manufacturing sector has lost over 630,000 jobs since 2000, representing nearly 30 percent of the sector’s workforce.
“These aren’t just statistics – they represent communities devastated by plant closures and offshoring,” said Jim Stanford, economist and director of the Centre for Future Work. “When public funds subsidize private industry, Canadians deserve stronger protections against corporate flight.”
The union’s proposal suggests a sliding scale of penalties that would require companies to repay government incentives if they relocate production within a certain period after receiving support. The penalties would decrease over time, acknowledging legitimate business adaptation while discouraging short-term opportunism.
Business groups, including the Canadian Manufacturers & Exporters, have expressed concerns about potential penalties, arguing they could make Canada less attractive for investment. “In a globally competitive environment, companies need flexibility,” said Dennis Darby, the organization’s president. “Additional restrictions might push investment to jurisdictions with fewer strings attached.”
Federal Industry Minister François-Philippe Champagne has acknowledged the union’s concerns but emphasized that current agreements already include job guarantees. “We’re always looking to strengthen protections for Canadian workers while maintaining our competitive position,” Champagne stated.
Economic policy experts note that similar measures exist in several U.S. states, where “clawback” provisions require companies to return tax incentives if job creation or retention promises aren’t met. However, implementing such policies nationally represents complex challenges, particularly under international trade agreements that limit certain forms of industrial policy.
As global competition for manufacturing intensifies, particularly in emerging sectors like clean technology and electric vehicles, the tension between attracting investment and securing long-term commitments will only grow. The federal government must now consider whether stronger accountability measures would protect Canadian jobs or risk driving away the very investments they seek to attract.
As Ottawa prepares its next budget, expected in spring 2024, a fundamental question remains: How can Canada balance corporate flexibility with accountability for public investments in an era of rapid industrial transformation?
