Proposal

The business sector has been one of the most fundamental aspects of the
contemporary human society. Indeed, the contemporary human society has
been striving to come up with strategies that would enhance the
efficiency, productivity and profitability of the business sector.
Needless to say, different sectors have different value to the varied
economies. Nevertheless, efforts have been made to expand the markets
for products and services provided in different sectors. One of the most
popular efforts in this regard has been globalization, which has
primarily involved the opening up of the borders of nations and
encouraging economic integration. This was aimed at enhancing free trade
between countries. Globalization has elicited numerous concerns in the
contemporary human society. This has primarily been as a result of its
effects on the economies themselves.
Critics have underlined the fact that globalization is primarily driven
by businesses that seek to enrich themselves and create more wealth for
their owners. They state that a large number of multinational
corporations have been increasingly going beyond the reach and control
of governments, thereby undermining national sovereignty (Azzi 15). In
addition, they usually play governments of different countries against
each other, with different governments striving to create the best
conditions for the corporations. Governments are always eager to attract
investments, in which case they reduce corporate taxes alongside the
labor, social and environmental standards. Low tax rates reduce the
government revenue while the lowering of standards result in degradation
of environment and mistreatment of workers.
Proponents of globalization have underlined the fact that the
phenomenon has enhanced the economies of different countries such as
South Korea, Hong Kong, Singapore and Taiwan, simply because of
increased growth rates (Azzi 16). The countries also have higher living
standards and increased employment.
Of course, there will always be differing effects of globalization on
the varied sectors of the economy. Indeed, developed countries are
affected in a different manner by globalization from developing
countries. In Canada, the automobile industry comes as one of the most
fundamental industries. Its production accounts for more than 40% of the
country’s GDP. However, it has not been spared the effects of
globalization. As much as there may be some positive aspects or effects
on the economy, the automotive industry in Canada has been negatively
affected by globalization. This paper examines the effects of economic
globalization on the Canadian automobile workplace, and the quality of
lives of Canadian workers.
Economic globalization has been one of the most controversial topics in
the contemporary human society. Indeed, a large number of countries have
been trying to contend with the mixed results or effects of economic
globalization. Needless to say, the introduction of the phenomenon was
aimed at bringing immense economic benefits to the varied countries that
embraced it. However, the phenomenon had varying effects or impacts on
different countries, as well as on different countries within a
particular country. This means that the effects of globalization may be
different for a developing country from the impacts of the same on a
developed country. On the same note, the effects of the phenomenon on
the banking industry may be different from those of the hotel or the
manufacturing industry.
As one of the most developed countries in the entire globe, Canada has
not been left behind as far as implementing some economic globalization
policies are concerned. Economic globalization underlines the process by
which the international market is integrated as a result of the
interexchange of products, world views, ideas, as well as other elements
of culture. It may also be used to underline the worldwide movement
towards financial, economic, communication and trade integration. This
phenomenon means the opening up f the nationalistic and local
perspectives to a significantly broader outlook pertaining to an
interdependent and interconnected world that involves or incorporates
the free transfer of goods, capital, as well as services across national
frontiers. Of particular note, however, is the fact that economic
globalization does not incorporate or include the unrestricted movement
or flow of labor. Countries and people respond in different degrees and
different ways to globalization. Of particular note is the fact that
globalization impacts more strongly on rich countries than poor
countries that lack or are deficient of capital, goods to trade and
advanced technology. The phenomenon has the capacity to cause
homogenization as individuals would increasingly consume comparable
goods and services. However, it is also known to elicit a backlash as
some people and groups react to the effects of globalization with
movements that lay emphasis on national and local concerns.
Canada has distinguished itself as one of the most globally integrated
countries in the entire globe (Azzi 9). It incorporates a highly
advanced information technology and communication system, a population
that is frequently travelling abroad, an economy that primarily relies
on trade, as well as a government that is significantly active and
vibrant in international organizations, not to mention it’s the
composition of the population of individuals from varied cultural
backgrounds.
Globalization has always faced stiff competition from other historical
forces especially nationalism. This has resulted in a situation where
history has seem both periods where the globe has become considerably
more integrated, as well as instances where the trend has become
reversed. As much as the term globalization was coined in the latter
half of the 20th century, the phenomenon is much older dating back at
least to the 19th century (Azzi 10). In the case of Canada, its economy
has been heavily relying on external capital and markets, at least,
since the 17th century. The Canadian economy in the early years was
colonial, in which case, a large proportion of its investments emanated
from its imperial powers (France and Britain). The prosperity of the
country’s economy was highly dependent on the exports of natural
resources such as fish and furs, minerals, wheat and lumber, as well as
the imports that the country made with regard to manufactured goods.
This was a form of globalization, albeit a selective one thanks to its
imperial ties. Indeed, the country had overseas investment and trade
links although these were fundamentally within the empire as the
imperial powers or the colonial system would shut out the other parts of
the globe.
At the advent of the 19th century, the country’s economy stated
undergoing fundamental modifications as it changed from a colonial
economy to a continental economy. Around the 1840s, Britain ditched the
mercantilist system that used to give imports from its colonies such as
Canada more preference (Azzi 10). This action meant that Canada would
have to compete with other countries such as the United States as it
sold its products to Britain, in which case it was forced to seek new
markets in the south. Marking the new dawn of globalization of Canada
was the signing of the Reciprocity Agreement between the United States
and Canada in 1854, which took effect from 1855 to 1855. This agreement
introduced free trade for numerous natural products and assisted in
shifting the trade in the country to a north-south pattern.
After the World War II, successive government of the country took up a
policy where they introduced lower tariffs in an effort to promote
trade. Indeed, the country made up one of the original or pioneer
signatories to the GATT agreement and even participated in negotiations
that resulted in a significant reduction of international tariffs. A
large number of people viewed multilateral trade agreements as a
technique for offsetting the influence that the United States had on the
economy and its trade (Azzi 11). This resulted in an expansion of
Canadian exports and created an era where the country experienced
immense economic growth lasting up to the mid-1970s. Within this period,
Canadians experienced low rates of unemployment and high standards of
living.
In the 60’s and 70’s, Canada sought to cut ties with the United
States thanks to the tarnished image of the later after the Vietnam War.
The country took up the “Third Option” a strategy that advocated for
the diversification of the country’s trade in order to lower its
reliance on the American market, thereby becoming truly globalised (Azzi
13). However, this policy had little effect as few countries were
interested in expanding their trade with the country. In addition,
geographical realities safeguarded the United States’ position as the
natural trading partner for Canada.
Canada has maintained intense connections to and its reliance on the
rest of the world. Testament to this is the fact that over 67% of
Canadians use the internet while the average Canadian makes over 500
minutes every year in international calls (Azzi 13). On the same note,
Canadians make over 25 million trips annually to other countries, while
foreign investments in Canada amount to more than 500 billion. The
country’s exports take up over 40% of its GDP.
Effects on the automobile industry workplace
As one of the largest automobile producing countries in the globe,
Canada`s automobile industry has taken up a large proportion of the
effects of economic globalization. Unfortunately, economic globalization
has negatively affected the automobile industry in Canada. Research
shows that the creation of the World trade Organization and the North
American Free Trade Agreement in 1995 resulted in trade deficits
(Conklin & Cadieux 3). Indeed, the auto-trade deficit, as at 2008,
exceeded $12 billion. The imports of automobiles from Germany has gone
up by 243% while the exports to the same dropped by 39% (Walker 8). This
has resulted in a trade deficit of $2.4 billion with Germany, which
means that for every dollar that Canada exports to Germany, it imports
$29. Similar trends have been observed in the trade balance between
Canada and Japan with import to Canada increasing by 118% while exports
from Canada have reduced by 69% leading to trade deficits of $6.3
billion (Conklin & Cadieux 6). This implies that Canada imports $135 for
even dollar that it exports to Japan (Walker 6). Within the same period,
trade imbalances have deteriorated between Canada and South Korea, with
exports from Canada declining by 75% while imports from South Korea have
increased by $710 leading to a trade deficit of $1.7 billion. Statistics
show that Canada imports $177 from South Korea for every dollar that it
exports to the country (Walker 8). This has, therefore, led to a
reduction of the level of productivity of the automobile industry.
On the same note, the Canadian workplace has seen immense change in the
composition of workers. Research shows that the Canadian workplace has
seen an increase in the relative employment of skilled or nonproduction
workers. This increase has been reflected in almost every other
manufacturing industry in Canada, as well as other developed countries
such as the United States. This shift in the demand towards the more
skilled workers may be attributed to two factors (Conklin & Cadieux 6).
First, there has been an increase in the usage of computers, as well as
other high-technology machines or equipment in the production or
manufacturing process. These equipments require the services of skilled
workers for them to operate. In addition, less skilled jobs have been
significantly outsourced to other countries in which the costs are
significantly lower. However, the later seems to have caused the former.
In explaining the manner in which outsourcing increases the relative
demand of skilled labor, scholars use a firm’s value chain which
incorporates the activities that are involved in the production of a
service or a good right from research and development, through assembly
and marketing to after sales service (Tavakoli and Grenier 5). In this
regard, Canadian auto-firms have the least amount of skilled labor
relative to the unskilled labor in the assembly stage, followed by the
component production, marketing and sales, with research and development
having the highest proportion of skilled to unskilled labor (Feenstra
4). The firms that are outsourcing to countries that offer lower wages
for unskilled labor send the activities that use the highest proportion
of unskilled labor. In this case, assembly and component production
would be outsourced to countries such as China and India, while the
tasks that require skilled labor are undertaken in the country (Feenstra
6). The increased outsourcing or off-shoring of activities would have
resulted from trade agreements with foreign countries resulting in a
reduction of tariffs or an enhancement of the infrastructure in the
foreign country and a reduction in the costs there (Tavakoli and Grenier
5). The outsourcing of less skill-intensive tasks means that the tasks
that are carried out at home are more skilled-labor intensive, resulting
in an increase in the relative skilled-labor demand in Canada.
On the same note, globalization has resulted in increased
competitiveness via increased flexibility in the automotive industries.
As much as there is increased demand for skilled workers, there is a
general requirement that workers continuously enhance their skills. The
production sequences, as well as the role and ownership of varied
service providers in the production process have been restructured
thereby changing the production architecture (Reichhart and Holweg 63).
Works and production managers are required to implant more standardized
processes in and across national borders so as to achieve higher levels
of targeted efficiency and quality. The restructuring has necessitated
that workers mobilize tacit knowledge, as well as enhance or upgrade
their knowledge and skills (Tavakoli and Grenier 6). Indeed, there has
been increased emphasis on the acquisition of multiple skills and
flexibility not to mention increased scope for self-regulation by
employees.
In addition, there has been a change in the role and power of labor
unions in the workplace. Scholars have underlined the fact that the
increased transnationalization of production would inexorably result in
the weakening of the local union’s ability to mobilize their powers.
This means that globalization has prompted a shift in power, as well as
a weakening of the local unions to take part in workplace change
(Lévesque and Murray 2). A large number of observers have
fatalistically pointed at the heightened disparity between international
employers and unions. In this case employers are characterized by
heightened capital mobility, the capacity to make coercive comparisons,
as well as the capacity to secure concessions in exchange for future a
promise of future investment. In this case, local unions have become
bereft or powerless in the face of such an array of immense employer
resources (Murray et al 244). On the same note, the heightened
decentralization of bargaining in a large number of national systems
coupled with the dismantling of pattern bargaining in some places has
further stressed the local unions that have less likelihood for
achieving their objectives when they are isolated from other unions
(Lévesque and Murray 3). This means that the local unions are not only
increasingly isolated but they also have lower capacity for inflicting
economic costs on corporations or employer in the automobile industry.
In addition, globalization has had mixed effects on the economic
welfare of employees and the quality of lives that employees in the
automobile industry in Canada lead. Of particular note is the fact that
the effects of economic globalization on the wages that individuals in
the automobile industry is dependent on the positions or the skill
levels of the individuals in question. Indeed, it is noted that economic
globalization has resulted in an increase in the demand for skilled
workers in the automobile industry (Sturgeon et al 14). This is
especially considering the increased usage of computers and other
equipments in driving operations in the automobile industry. In this
regard, the skilled laborers have experienced an increase in their
relative wages. It is worth noting that the same cannot be said as far
as the unskilled laborers are concerned. Indeed, scholars have noted
that the unskilled laborers have not only had their wages driven down by
the reduced demand for them (Sturgeon et al 17). Of course, the
outsourcing of less skill-intensive tasks has driven the wages down.
However, there has also been an influx of immigrants who also have low
skills in the automobile production process, in which case the supply of
such services has gone up thereby driving their wages down.
Annotated Bibliography
Sturgeon, Timothy., Biesebroeck Johannes.Van. and Gereffi, Gary. (2007)
Prospects for Canada in the NAFTA Automotive Industry: A Global Value
Chain Analysis, Industry Canada, Research Report. 2007 Print
This report examines the trends of Canada`s automobile industry in the
age of globalization. Indeed, it examines the trends that North American
automotive industry has taken up while posing the question on whether
the comparative advantage that Canada has in this industry can be
sustained. It acknowledges that the Canadian automobile industry has
primarily been shaped by the historical ties that the country has with
the Big 3 American Automakers including Chrysler, Ford and General
Motors, as well as the proximity of the country to the heartland of the
United States industry in Michigan, as well as the surrounding
Mid-western states.
Reichhart, Andreas. and Holweg, Mathias. ‘Co-located supplier
clusters: forms, functions, and theoretical perspectives’,
International Journal of Operations & Production Management Vol. 28, No.
1, pp.53-78. 2008, print
This paper incorporates a study done to determine the theoretical
perspectives pertaining to collocation of supplier clusters. The study
was carried out through semi-structured interviews with operation
executives in the automotive industry. It reached the conclusion that
the transaction cost economics are less suitable in the study of
dedicated co-location.
Macaluso, Grace. CAW demands new ‘bold vision’ for Canada’s
auto industry. Financial post, 2012. Web retrieved from HYPERLINK
“http://business.financialpost.com/2012/04/16/caw-demands-new-bold-visio
n-for-canadas-auto-industry/”
http://business.financialpost.com/2012/04/16/caw-demands-new-bold-vision
-for-canadas-auto-industry/
This article examines the reaction of Canada`s auto workers union to
the increased negative effects of globalization. It states that the
Union has been calling for a termination of Free Trade talks between the
country and other nations such as Germany and Japan, and South Korea,
while also asking for the imposition of tariffs on entities that do not
assemble vehicles in Canada. The Union also put down a 10-point strategy
that would reform the automotive industry in Canada so as to enhance its
competitiveness in the era of globalization.
Lévesque, Christian and Murray, Gregor. Union Bargaining Power in the
Global Economy: A Comparative Study of Workplace Change and Local
Unions in Canada and Mexico.
This paper examines the impact of globalization on the powers and roles
of labor unions especially in the automotive industry. The study is not
restricted to Canada alone but also Mexico with specific mention of the
United States. The reference to the United States has been underlined by
the fact that it forms an immense ally to the two countries as far as
trade is concerned. On the same note, the two countries have been
competing against each other as far as trade in automobile is concerned,
with Mexico taking up an immense proportion of the United States market
while Canada has had its market shrinking. The paper argues that the
bargaining power of local unions in the context of globalization would
be enhanced through increased internal solidarity, the pursuit if an
independent agenda, as well as stronger articulation with other union
levels and community activity.
Murray, Gregor., Lévesque Christian., and Vallée, Guylaine. The
Re-Regulation of Labour in a Global Context: Conceptual Vignettes from
Canada ”, The Journal of Industrial Relations, vol. 42, no 2, pp.
234-257, 2000, print
This paper draws from three vignettes pertaining to Canadian labor
regulation and aims at coming up with a theoretical account pertaining
to the nature of labor regulation, as well as re-regulation after the
entry of globalization. Once it has identified the varied dimensions
pertaining to globalization, it examines four characteristics of labor
regulation while paying particular attention to the impact that
globalization has had on them. The features examined, in this case,
include the roles that organizational processes and contingency play in
shaping work rules, the type of employment relationship, the nature of
rules pertaining to work, the significance of balance of power between
the actors in shaping the regulation of labor, as well as the actors’
strategic interdependence.
Walker, Cathy. Canadian Auto Industry Effects of Globalization and
Current Financial Crisis. CAW Research Department, 2009. Web retrieved
from HYPERLINK
“http://www.slideshare.net/cathywalker856/canadian-auto-industrycawnov20
09″
http://www.slideshare.net/cathywalker856/canadian-auto-industrycawnov200
9
This paper examines the trends that the Canadian automotive industry has
demonstrated since the entry of globalization. It chronicles the changes
that the trade balances between Canada and other countries such as
Germany, Japan and South Korea has experienced right from the entry of
globalization with regard to the automobile industry. Indeed, it notes
that in all these cases, there has been a worsening of trade balances or
trade deficits between Canada and the three countries, with the exports
from Canada to these countries decreasing, while imports from these
countries to Canada have been on the increase.
Azzi, Stephen. Globalization. Historical Canada. 2011 Web retrieved from
HYPERLINK
“http://www.thecanadianencyclopedia.com/en/article/globalization/”
http://www.thecanadianencyclopedia.com/en/article/globalization/
This article examines the globalization phenomenon with respect to the
effects that it has had on the Canadian industries. It defines the
phenomenon and gives an apt description of its history and development
right from the times when Canada was under colonial rule. In addition,
it traces the attitudes that different regimes have had with regard to
globalization, the reactions that the phenomenon developed or elicited
from the Canadian public, the changing aspects of the relationship
between Canada and its main trade partner (the United States), as well
as the effects that the different trade agreements have had on the
economy in general. In addition, it captures the varied arguments that
proponents and opponents of the concept of globalization have put
forward, without offering support for any side.
Feenstra, Robert C. Globalization and its impact on Labor. Global
Economy Lecture, 2007. Print
This paper examines the impact of globalization, especially free trade
on varied aspects of the Canadian economy. Of particular note is the
fact that it borrows immensely from the free trade that came with the
making of the European Union. As much as the context is different the
effects of free trade in the European Union and in Canada are similar
especially with regard to the trends pertaining to outsourcing and wage
differences in the automobile industry. The paper acknowledges that
there are variations or restructuring or modifications in the wages for
skilled and non-skilled laborers, especially considering the changes in
the demand for their services in the automobile industry with the entry
of globalization. Indeed, it acknowledges that there has been an
increase in the demand of skilled laborers in the automobile industry,
while the demand for non-skilled laborers has gone down considerably.
This has resulted from the outsourcing of particular tasks to countries
that offer unskilled labor at considerably low cost.
Tavakoli, Akbar and Grenier, Gilles. Globalisation and Wage Inequality:
A Comparison of the Manufacturing Sector in Canada and the United States
from 1970 to 2001. The University of Ottawa, 2004. Print
This paper acknowledges the worsening economic position of low-skilled
workers in comparison to high-skilled workers in a large number of
industrialized nations since late 70s. The paper renders credence to
this notion by comparing the United States and Canada with regard to the
evolution of relative wages of both non-production and production
workers (skilled and non-skilled workers) in the manufacturing industry
from 1970 to 2001. The study outlined in this paper demonstrates the
fact that the wage ratio between the two groups is impacted by similar
economic globalization variables for the two countries. Of particular
note, however, is the fact that the overall effect of globalization is
significantly higher in the case of Canada apart from the case of
technological changes. On the same note, when imports from developing
countries and technological changes are compared, the later comes with a
more harmful impact on low-skilled workers. In the case of Canada, the
union variable has a more pronounced effect among other variables, while
the two countries are minimally affected by immigration.
Conklin, David. W & Cadieux, Danielle. Globalization Threatens Canada`s
Auto Industry: Implications for the Economy and Society. New York: Ivey
Publishing, 2006. Print
The 12-page book underlines the crucial role that the automobile
industry has played in the Canadian economy. This is especially
considering that a large number of jobs in the country are dependent on
the automotive industry. As much as globalization was aimed at expanding
the industry’s (as well as other sectors’) market, the phenomenon
has had negative effect on the Canadian economy. Indeed, it states that
a large proportion of automobile-related jobs in the country in the
future would be dependent on the Canadian plants’ international
competitiveness. Canadian automobile companies cannot afford to
persistently increase wages as this would result in an increase of
production costs in the country to levels that are beyond those of other
countries such as China and Mexico, among other emerging economies. This
would cause manufacturers to shift production of the same to low-cost
economies.
Works cited
Conklin, David. W & Cadieux, Danielle. Globalization Threatens Canada`s
Auto Industry: Implications for the Economy and Society. New York: Ivey
Publishing, 2006. Print
Tavakoli, Akbar and Grenier, Gilles. Globalisation and Wage Inequality:
A Comparison of the Manufacturing Sector in Canada and the United States
from 1970 to 2001. The University of Ottawa, 2004. Print
Feenstra, Robert C. Globalization and its impact on Labor. Global
Economy Lecture, 2007. Print
Azzi, Stephen. Globalization. Historical Canada. 2011 Web retrieved from
HYPERLINK
“http://www.thecanadianencyclopedia.com/en/article/globalization/”
http://www.thecanadianencyclopedia.com/en/article/globalization/
Walker, Cathy. Canadian Auto Industry Effects of Globalization and
Current Financial Crisis. CAW Research Department, 2009. Web retrieved
from HYPERLINK
“http://www.slideshare.net/cathywalker856/canadian-auto-industrycawnov20
09″
http://www.slideshare.net/cathywalker856/canadian-auto-industrycawnov200
9
Murray, Gregor., Lévesque Christian., and Vallée, Guylaine. The
Re-Regulation of Labour in a Global Context: Conceptual Vignettes from
Canada ”, The Journal of Industrial Relations, vol. 42, no 2, pp.
234-257, 2000, print
Lévesque, Christian and Murray, Gregor. Union Bargaining Power in the
Global Economy: A Comparative Study of Workplace Change and Local
Unions in Canada and Mexico.
Macaluso, Grace. CAW demands new ‘bold vision’ for Canada’s
auto industry. Financial post, 2012. Web retrieved from HYPERLINK
“http://business.financialpost.com/2012/04/16/caw-demands-new-bold-visio
n-for-canadas-auto-industry/”
http://business.financialpost.com/2012/04/16/caw-demands-new-bold-vision
-for-canadas-auto-industry/
Reichhart, Andreas. and Holweg, Mathias. ‘Co-located supplier
clusters: forms, functions, and theoretical perspectives’,
International Journal of Operations & Production Management Vol. 28, No.
1, pp.53-78. 2008, print
Sturgeon, Timothy., Biesebroeck Johannes.Van. and Gereffi, Gary. (2007)
Prospects for Canada in the NAFTA Automotive Industry: A Global Value
Chain Analysis, Industry Canada, Research Report. 2007 Print
Surname PAGE * MERGEFORMAT 17