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Mr. ZEFERETTI. May I ask a question. You were talking about this Chrysler Cordoba, do they have their own parts manufacturing office or company or plant in Canada themselves?
Mr. DAY. They have Chrysler purchasing buyers who buy in Canada from Canadians. I have a right to go there and I've gone there but I don't stand a chance because they are going to deal with the Canadian counterpart.
Mr. DENT. Mr. Zeferetti, you must understand that part of this agreement is that a certain percentage of Canadian parts must be put into any car destined for the United States.
Mr. DAY. I think it reads a minimum of 60 percent of all parts have to be made in Canada.
Mr. ZEFERETTI. Do you send any of your parts or any other manufactured parts directly to Canada? Do you deal directly with the manufacturer of the car?
Mr. DAY. No. In the purchasing policy the United States allows an option for the Canadian buyer to buy some from me or other suppliers if he has to and occasionally I get some orders from Canada but they are few. They are like maybe a half of one percent or a quarter of one percent. I can get you those numbers of what I ship to Canada compared to my overall, but it's so nominal, it's just negligible because most of them are made there by my competitor. And by the way, Ford Motor Co., I can't even get in there. Ford Motor Co. buys from this Canadian competitor of mine these same gear shift levers for five different styles, different bends. His sales are over $1 million a year and he is employing 70 to 100 people working on just the levers themselves and he has 60 percent of all the Ford business. That's one little segment and one little supplier.
Now, by the way, I mention how you can accurately ascertain. This is what you're after, aren't you, how many jobs are lost.
Mr. DENT. We're after how many jobs are being displaced and what the effect is on our economy.
Mr. DAY. In Mr. Eberle's report he talks about what the gain has been for the United States for jobs. Had we not had the Auto Trade At we would have had a gain anyway in our natural growth and dup. We would have had a gain; who knows what it would have en because we just have to estimate what it would be. So, in essence, don't think we've gained anything. We've lost jobs, a lot of jobs. Mr. DENT. You've just talked about the Cordoba. The overall ture of all Chrysler products made in Canada is interesting; Chrysler inced 262,714 cars in Canada; of that, 225,545, or 85 percent, me back to the United States.
Mr. DAY. That doesn't surprise me.
Mr. DENT. It surprised me because they built a plant in my town d forgot to put equipment in it.
Mr. DAY. They keep expanding in Canada and I think they're at a t where their expansion is such that it's far more than enough for adian consumption. So what are they going to do with the rest of hey're going to export the rest of it to the United States or elsere and that's what is happening.
Mr. GAYDOS. Could I ask you, is your shop a union shop?
Mr. GAYDOS. Do you know whether your competitor in Canada is nion shop?
Mr. DAY. He was organized about a year ago.
Mr. GAYDOS. Do you expect your shop to be organized in the future?
Mr. DAY. It's hard to say. I've had five attempts and my empl have always voted nonunion.
Mr. DENT. Is there a possibility-I don't like to open that su up but I would make an observation that probably that may determining factor in the attitude, up until a couple weeks ago, has been prevalent in the automobile workers' support of the Can: Pact?
Mr. GAYDOS. You say it's organized, your competitor?
Mr. DAY. Yes. UAW is now making an attempt to make companies manufacture all parts in-house, and cut businessmer me out. I wish Woodcock was sitting here. I'd like to have a littl bate with him. The only reason they're doing that, let's face it, want the union dues. They want them in their fold. I feel this, have the right to vote for a union or not and that is their privilege when you have a union into a small company, it's because of management.
Mr. GAYDOS. I don't want to differ on your philosophy and t not why I asked the question. I asked the question because I wa to glean from your testimony and the facts why that Yugoslav put together in Canada a manufacturing process is making an product that is more competitive than yours and I thought poss it was because of a wage differential. You and I may have terrible ferences on the philosophy of whether or not a person should jo union but that's not why I asked the question.
Let me ask you this and then I'll stop. When, for instance, c that competitor of yours be a captive of General Motors in country?
Mr. DAY. No; he's an independent.
Mr. GAYDOS. How about in other areas, other parts?
Mr. DAY. No; not at all.
Mr. GAYDOS. Staff suggests that a question be posed to you whe the U.S. supplier of parts for General Motors also transfers that product over to Canada where it would then be incorporated into end product?
Mr. DAY. My parts are shipped to Chevrolet assembly plants in country. They are designated all over the United States.
Mr. GAYDOS. That's how you answered before, you don't kr where those parts shipped?
Mr. DAY. Yes; I know.
Mr. GAYDOS. Where do they go?
Mr. DAY. Well, they go to a Chevrolet assembly plant. I know t are going to build 2,376 cars next week and we get a schedule and parts must be in there along with other supplier parts to build th cars. So I know that.
To Chevrolet we ship all over the country, the west coast. Mr. GAYDOS. You wouldn't know if your parts are being shipped Canada for incorporation into the end product up there?
Mr. DAY. Yes; occasionally they will say to send 500 pieces Canada.
MS. DOMENICK. If you don't supply parts to Canada, who does? Mr. DAY. My competitor in Canada.
Ms. DOMENICK. Do any U.S. companies supply parts to Canada? Mr. GAYDOS. Beside yourself. You can't be the only man in this country manufacturing those articles.
Mr. DAY. I'm sure they supply some parts. I can't answer that. Mr. GAYDOS. That's why we're asking you the question. If you can't answer it, you can't.
Mr. DAY. General Motors has 20,000 suppliers. Of the 20,000 suppliers, would you believe 90 percent, 18,000 suppliers are small business companies with under 500 employees who do an annual sales volume with GM of $5,000 or more. I checked these figures and I called their legal staff to get this information and I have to say General Motors is great to deal with. They're super. They don't care about your size. If you're on the ball, and you have the knowhow, and you have the equipment, and you work. If you give them service and quality and a competitive price you have the business and they are loyal to you. Over 50 percent of all parts used by the General Motors are made by outside suppliers like me.
Mr. GAYDOS. I'm glad you have that opinion of General Motors because some other people have another opinion of General Motors and what they have done but I'm glad you feel that way.
Again we're getting a little philosophical.
Mr. DAY. I don't know how the other people feel.
Mr. ZEFERETTI. Are you saying you're not competitive because of this agreement and what is going on? Is that what you're saying? Mr. DAY. I'm not competitive-it's unfair competition for me, or for companies like mine. It's unfair competition because my competitor has inferior equipment.
Mr. ZEFERETTI. Is he underbidding you?
Mr. DAY. Right. His costs are lower because his labor costs are lower, because his material costs are lower and he doesn't have to contend with stupid things like OSHA which is nothing but a duplication. The State of Michigan comes in and they will say they're interested in safety standards and health standards in your plant. You've got a little frayed wire up there that should be replaced. Two weeks later OSHA comes in and they say, "Hey, you've got a frayed wire up there that must be replaced". It's a duplication of effort. It's part of our bureaucracy right here in Washington, D.C.
Mr. DENT. We appreciate that, because if you get into the bureaucracy, I'll be sitting where you are. I've got a few choice words for them. myself.
Mr. ZEFERETTI. You say they're unionized in their shop and yet they're underbidding you?
Mr. DAY. Because they have lower costs and have slower machinery. It costs me more to make the part. It we were comparing apples to apples, if they had the same labor rate we did, if they had the same cost that we do, if they had the same workmen's compensation that I have in the state of Michigan, they could not compete. They ndicted 12 men the other day, a couple union officials for telling Deople
Mr. ZEFERETTI. If they're union and you're not, I would assume he union scale and fringes in Canada would be equal to the ones in the United States and they should be at a par and you, as a nonunion hop, should be able to compete a little bit differently, I would think?
Mr. DAY. No. The union scale is only the same at the autom assembly plants. General Motors told me this, that their scale in plants in Canada, the assembly plants, are the same but not a lower level, not at the supplier level.
Mr. ZEFERETTI. You say not at the supply level?
Mr. DAY. Not at the supply level. You see his labor rates al cents an hour cheaper than mine. I don't know when he was organ by the union. Maybe he gave in for two bits or 20 cents. He's under me. In fact, I'm losing another 10 employees in about a m because his costs are lower. He doesn't have workmen's compensa he doesn't have OSHA, he doesn't have unemployment compensa to deal with. He has lower costs. He buys his raw materials cheape Mr. GAYDOS. Maybe you should move to Canada.
Mr. DENT. I don't think anybody on the committee has illusions about the origins of the Canadian Auto Pact. Nor do 1 have any illusions about why they shipped back so many cars to United States.
Mr. DAY. That's right.
First of all, as I understand it, the Auto Trade Act was starte part because they were fearful of the retaliation of one country another? Am I right?
Mr. DENT. My friend, for 20 years this committee has listened the word "retaliation." When some country about that big threa to retaliate, we stick our tail between our legs and run like hell for kennel. One of the greatest threats to America is the misuse of t word.
Mr. DAY. I have another word for it. We have no damn guts we can't stand up to this. We're saying we are a great big brot and this poor little country we're going to help them. Go to Mont and Toronto, it's a thriving community. And by the way, it saic a report here that it's kind of mysterious that we had a recessior 1975. Canada didn't have a recession and you know why they dic have a recession, they had all our damn jobs up there. They w able to cut it.
Mr. GAYDOS. Would the gentleman yield? As I understand Mr. Chairman, the reason for the Canadian Pact was because Cani was unable-well, I have concern for jobs, too, but supposedly beca Canada couldn't produce a unit item on an automobile as cheap as we could on the automated processes and I think that's what i main complaint was.
Mr. DENT. The main complaint was the 33-percent tariff they w charging to compensate them for the job loss incurred as a con quence of imported cars. It is a question of the cost of productio When they can't make it cheaper, they have compensating valt upon which tariffs are established. We never had a 33-percent tal on Canadian products.
Mr. Ashbrook just told you about manufacturers in his own ar making mining equipment, some of which is exported to Canada a 17%1⁄2-percent tariff. The same company ships the same thing ba here where there is only a 5-percent tariff.
Mr. GAYDOS. Mr. Chairman, the statement I made was the selli price of an automobile manufactured in Canada was 33% perce higher than what the American automobile sold for in Canada al
hat's what gave them supposedly some semblance of righteousness o make that 33 percent.
Mr. DAY. It's true their cost of producing a car at one time in view of their low volume was higher. That is granted. Now their volume as gone up and they have become more competitive in producing ritomobiles and they produce a lot of automobiles now and some hey export even to Fidel Castro. So they have raised their volume and they have lowered their cost.
But I'm talking about at the supplier level you failed to consider this at all. It has hurt American small business suppliers and these os have gone to Canada and that hasn't even been considered in sny of these figures.
Mr. GAYDOS. The committee has taken the position repeatedly and the chairman has been in the forefront in making that argument. The point I'm trying to make and some of my inquiries are directed et you for this particular purpose, it's fine to say cut out all of these super reasons and cut out all these figures and get down to basic onsiderations of the problem. It's fine to say that but I want you to understand we have a very, very difficult adversary here. We have to Gore in and we have to find facts and we have to make logical arguents to convince anybody to pass legislation. It's a very difficult hing to do and that's why I asked you-maybe you thought it was superfluous question when I asked you where your 30 jobs were hat you lost in that figure so we can take you as an example and inpoint it and go through a series of areas. It seems a simple thing to do on the surface let me assure you it's the most difficult and tedious nd the end results, I don't foresee a possible result in our hearings or some successful regulation. It's very difficult to prove these things.
You're now exposed this morning, sitting there listening to a maze of figures, three different approaches to it, contradictory figures. I should have asked the gentleman if the internal figures are so accurate and we can rely on what you're telling us, how do we come about to have missed hundreds of millions of dollars by accountants. in the international area where we've been paying it off illegally. You see, I didn't have a chance to ask that because he couldn't give ne an answer. We have the free enterprise system and I'll fight to by last breath to keep it going because I think it's done more for Lore people and made this country the greatest. I'm talking about he practicality of boring in and getting facts together and making a ase out of it and that's what we have to do and I think you can p us and I think you have helped us and its witnesses like you at make our job a little easier and steers us in the right direction. Mr. DAY. I'm saying my Canadian competitor underprices me 5 10 percent, not because he's more efficient than I am. He's getting Le business and it isn't right. And I'm not saying this for me, I'm aying this for all American business and you should delve in and nd more suppliers like me, somebody in stamping, for example. Let me give you a little example. Before I had my plastics company, used to farm out, this part [pointing to knob to a company alled Warrent Plastics in Warren, Ohio. They did a fine job. Along ame a Canadian outfit in Toronto. They made it for a good 10ercent cheaper, so I started buying from them. I farmed it to Canada