The first part of this story may seem to digress from the subject of Tariffs but it is actually a background of how we survived them in another time.
My daily routine, most every day, is to start with a full cold breakfast of cereal, fresh fruit (banana), yogurt, and one cup of decaf coffee. Most importantly though is to have the business section of the Globe and Mail with me at the table. For the last 20 years of my (full-time) work career, this was a mainstay, and I have continued it into my retirement.
This morning (Jan./25), while reading the Globe, I just burst into laughter. While the Canadian news is jammed every day with end of the world rhetoric over tariffs, it donned on me, that I had survived it and saw ways of how to work around them in the 60’s and 70’s before first, the Auto Pact and eventually, a so called “Free Trade” market.
My local friends do not allow me to talk (ad nausea) about hitchhiking to Toronto in 1960 with a handful of change in my pocket (a slight exaggeration) but I did start to work there for a giant multi-national corporation as a “Postage Meter Operator” – in reality, I was a mail boy. One little difference, the girls were “Mail Delivery Persons”. Boys got $175 a month and the girls got $160 a month. The BIG difference was that only the boys could change the amounts on the postage meters. Stamps for letter envelopes at that time were $.05 and page size was $.07. We averaged more than 5,000 pieces of mail a day. One would feed the mailings in and the other would pack them. The only other difference was that the boys could take the meter to the post office, escorted and driven by a plant security officer, to reload the meters with a $5,000 check to pay for the reload.
Less than a year later, I got my big break and was hired into the Factory Accounting department as a junior accounting clerk. There were no such things as computers, just rows and rows of clerks in an open office where you could hardly see the end. The factory was at 3050 Lakeshore Boulevard in New Toronto and the office was on the 4th floor, stretching from 8th to 13th street.
My first accounting job every morning was tabulating tire ‘Inner Tube” production from the inner tube plant in the giant 1.2 million square foot tire, tube, food wrap, foam seat and mattress, aircraft wheel and brake assembly, and miscellaneous rubber products manufacturing facility.
Yes, everything that our company made elsewhere in the world, we made at this one giant facility. TARIFFS protected us from imports, as they did in the US, Europe, Australia, and elsewhere throughout the developed world.
My role grew to include some other very menial tasks.
One was referred to as preparing Duty Drawback claims. There were certain raw materials that we had to purchase from outside Canada (mostly US) as no manufacturer existed here in Canada. Tariffs would be paid on them when they arrived in Canada. If we exported finished products anywhere outside of Canada, the duty/tariff amount included in the cost would qualify for a refund from the government. Sales documents would then be created by our Export Sales department.
I would work with the product Cost Accountant to break down the product into all of its raw material components and then accumulate the weight of each of the imported products, determine the amount of duty paid, and prepare the claim documents. This was one of the worst jobs that I ever had to do. I would be working away with piles of detailed documents while the more senior “Cost Accountant” would treat me like his slave. Many times, the duty amount to claim would be less than $1 on a tire and there would have been eight of them shipped to Jamaica. My effort would have taken four hours of painstakingly detailed work.
That in itself was a good enough incentive to work hard and move up the “food chain”.
Another step up the ladder was when I got moved up to an intermediate accounting clerk role. Again, the expertise that I had gained in the duty drawback job made me a candidate for another related but totally different task.
This can best be described as “Tariff Avoidance”. After WWII the Japanese could NOT export any products outside of Japan unless the destination country was approved by a US company in the same business. This was a 20-year restriction to ensure that Japan did not again rise to dominance. Canada was a country the Americans would NOT allow Japan to ship products to.
One of our lawyers determined that we could buy Japanese raw materials through an offshore company domiciled in an ‘allowable’ country. So, a brand new subsidiary company was formed and it was in Bermuda. A “Manager” was hired. We would feed him orders to purchase certain ingredients, he would place the orders in Japan, goods would be loaded on ships, with shipping directions (not to Canada) which would later be changed to come to Vancouver or Halifax. I had the honour of being the Chief Financial Officer of this “Trading Company”, which meant that I maintained the records and published reports until the goods arrived at the plants in Canada. The “manager” lived in Bermuda “part-time” and I looked after the paperwork in Toronto. One of us had a better job than the other.
Firstly, the “Auto Pact” in 1965 integrated auto parts production between the US and Canada. This quickly revealed that our industry could not compete. Our Canadian plants were a third or less the size of theirs. Ours were old multi-floor operations while the US had single floor automated plants. We had elevators and conveyor belts in our plants while they had single operations with in-one-end and out-the-other production capabilities. The writing was on the wall.
Over the 20 years that followed many small tire and rubber production facilities closed all over Ontario and Quebec. Today, in Canada there are only three companies manufacturing tires in Canada. In 1965, there were eight.
This is a Canadian industry that survived because of Tariffs for 50 years and, without them, shrunk significantly when the market was opened up.
It takes innovation, productivity, and volume to keep up.
Tariffs are not desirable, but we will survive.
G. William Streeter January 28, 2024