The high loonie accounts for just 20 per cent of the country’s uncompetitive position on global markets, Canada’s top central banker said at a gathering of the Canadian Auto Workers union on Wednesday.
In a rare meeting of Bay St. and Main St., Carney is speaking in Toronto in front of CAW members. It is Carney’s first ever public address to a labour group and he is the first central banker to speak publicly at a Canadian union event in more than a quarter of a century.
The man who sets Canada’s interest rates, controls inflation and has been tapped to head an international financial reform agency came face-to-face with a hotel ballroom full of working folks who are directly affected by the bank’s policies.
In his speech, Carney aimed to quash the notion that the strong Canadian dollar is the reason behind this country’s weak exports, which have hit the manufacturing sector and auto industry hardest in recent years.
“Some blame this on the persistent strength of the Canadian dollar,” Carney said in prepared remarks ahead of his speech. “While there is some truth to that, it is not the most important reason. Over the past decade, our poor export performance has been explained two-thirds by market structure and one-third by competitiveness. Of the latter about two-thirds is the currency while the rest is labour costs and productivity.
“So, net, our strong currency explains only about 20 per cent of our poor export performance.”
“In short, our underperformance prior to the crisis was more a reflection of who we traded with than how effectively we did it,” Carney said.
“We are overexposed to the United States and underexposed to faster-growing emerging markets.”
Carney came to the convention at the invitation of CAW president Ken Lewenza.
“We invited him because of his importance in the overall economy. We think the CAW is an important economic player, and it’s a good match for us to hear what he says,” explained CAW economist Jim Stanford.
They’re a study in contrasts.
Lewenza, 57, started at Chrysler installing mufflers in 1972. He ran the powerful Windsor Auto workers’ local for 14 years and also master negotiator for Chrysler, where he forged a reputation for militancy and hard-nosed tactics.
Instead of maintaining its status in the labour movement as the country’s trailblazer, negotiating the best contracts in the once-richest industry, the CAW for the first time accepted concessions in 2009 to save jobs.
Lewenza replaced Buzz Hargrove in Sept 2008 as national president of the 195,000 member CAW.
With files from The Canadian Press