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Volvo Article Notes.docx

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SOC 202
Louis Pike

Industrial Estates Limited- develop Nova Scotia’s industry How did Volvo fare at the hands of the federal government in comparison with the rest of the automotive industry, which was overwhelmingly located in central Canada – principally Ontario? On balance, given that the venture lasted for nearly four decades, could the Volvo plant be considered a successful venture? Why did Ontario plants thrive under the Canadian state’s central automotive policy – the Auto Pact – but the Volvo plant did not? How did the Halifax plant fit into Volvo’s corporate strategy? In the final analysis, were the policies implemented by the two governments to persuade Volvo to locate and remain in Nova Scotia a success? Article explains why federal/provincial policy makers encouraged establishment of Volvo with incentives and tariff concessions. 1958-65: first “transplant” in Canada or US widespread penetration by American multinational auto companies, little or weak domestic manufacture and parts production and balance of payments difficulties owing to its dependence on foreign automotive imports. Voluntary Planning Act of 1963-which was intended to improve business-government communication IEL’s “philosophy and policy” as Sobey stated in a 1968 Financial Post interview, was based on four points: to maintain the interest and active participation of prominent Nova Scotia businessmen on its board of directors, to maintain a small but effective development and office staff, to make an aggressive search for new manufacturing enterprises on an international scale and to keep an eye out for Nova Scotia firms that might be able to profit from IEL. ---------------------------------- Nowlan, Nova Scotian and a “red tory” he was motivated to help areas in his province Volvo in Canada would not be an immediate success with the high tariff rates, in spite of their inclusion of headlights, bumpers, tires that were Canadian made. -Canadian exports are the emphasis, but with duty free imports as a result of Auto Pact, US dominated. -If the market for autos in Canada performed poorly, employment and production declined. If the market performed well, massive U.S. parts and vehicle imports would send the Canadian trade balance spiralling downward. -By 1962, auto imports accounted for 90 per cent of Canada’s nearly $500 million trade deficit. Gov’t created duty-remission scheme that enabled companies to increase imports if they increased exports In return for assurances that Volvo train 500 Canadians as mechanics and hire at least 400 workers at their new plant, the company received remission of duties on bodies, engines and parts through a process similar to the transmission/engine program. Initially, Volvo was allowed to begin production with virtually no Canadian content while importing their parts duty-free. In Sept/Oct 1962, Samuel met with IEL president and others to discuss two things: costs of transportation must be cut to tr
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