A Quarter Century of Car Making
Canadas leading motor car manufacturer discusses the record of the industry to date and its future prospects
R. S. McLAUGHLIN
A LITTLE more than twenty-five years ago the people of this country were riding in buggies. Carriage building was one of the biggest industries in the country. The McLaughlin factory at Oshawa was producing about 15,000 units annually, and other carriage factories were also operating on a large scale. Then came the motor car, and it received anything but cordial or instant recognition. The carriage industry for a time put on a bold and scornful front, and it is only necessary to hark back to the lithographed calendar pictures of the McLaughlin Carriage Company issued between the years 1905 and 1911, to get an idea of the feeling we had toward this upstart motor-car business. The four calendar pictures to which I refer are worth studying. They tell a most amusing story of a conversion. 1 was secretary-treasurer of the McLaughlin Carriage Company during the years when those calendars were issued, but I myself find them just as amusing as an outsider.
Times do change, but we sometimes fail to realize how rapidly. We look back at the lofty two-cylinder models first made in Canada and then at the beautiful multi-cylindered cars of today, and we scarcely appreciate that this progress has been made in a generation, Is it possible that in another twenty-five years the models of today will appear as archaic as these of the first decade do now'? 1 wish I were prophet enough to answer.
We often speak of the motor vehicle’s contribution to the industrial and social life of Canada. We say
proudly that the motor-car industry, from a manufacturing standpoint, is more highly developed than any other industry in the Dominion; that automobiles, more than any other product, have advanced in value and decreased in cost to the consumer. Compare a certain light car of 1920 at a retail price of $1,795 and the same make and model today at about $700. We refer to triumphs of automotive engineering, and point with pride to the style and quality of the cars we make in Canada.
Viewing the progress we have made and our place in the scheme of things, we fail to appreciate that after all we are a very young industry.
And if we in the business fail to realize this fully, there is excuse for the public generally, many of whom, I am sure, accept the high efficiency of motor transportation, and the economic contribution made by the industry, with scarcely a thought of its rapid and praise-
worthy development, or any clear picture of the sometimes thorny path it has so rapidly traversed. Yet twenty-five years ago everybody was riding in horse-draw'n vehicles.
The year the first Canadian automobile was manufactured was certainly a transportation epoch. Conceivably, the launching of the second quarter-century of the industry now' grow'n so great is another. What happened in between, in those twenty-five years of
struggle and faith and progress, is important if we wish to appreciate the present and get a straight view into the future.
People have asked plain questions about the motor industry in Canada, and I am pleased to have the opportunity of giving them some plain answers. Buyers of automobiles want to know all kinds of things. They ask why it costs more to produce a car in Canada than in the United States; why motor-car designs and styles
change so rapidly, thus subtracting from the the re-sale value of cars in use; why a car costing $2,000 today can be traded in for only about $1,200 a year from today; w'hy a tariff of twenty per cent does not put the Canadian motor-car manufacturer on better than even terms with outside competition. And besides all that, they want to know, like the rest of as, the destiny of the Canadian automotive industry in the years to come.
'"TO BEGIN with, let us look back over the first 1 twenty-five years of the indastry’s activity in Canada. Ford started to manufacture about 1903 and has continued to the present time. The McLaughlin Company entered the field in 1906 and is today a big factor in the w’hole picture. But look at some of the other cars The Tudhope Everett, the Brockville Atlas, the Guy, the Gray-Dort, the Keaton, the Galt, the Schacht, the Russell, the London Six. Where are they now? All this leads up to the statement which I believe to be true, that a strong and close affiliation with a parent organization having a large production is essential for any motor concern which seeks to carry on in Canada
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at all. It is economically unsound to design, develop and manufacture a car complete in Canada and compete on even terms against the car producta of companies outside Canada which have tremendous volume production to assist them. This is emphasized most emphatically by the fact that it is now deemed necessary to make changes in the design— minor changes from year to year, and major changes occasionally. I am sometimes asked why it is necessary to change the styles, and I can only answer that competition does that. A man hardly ever wears out a suit of clothes. He buys other suits as the styles change.
Let us see what the changing styles involve for the Canadian manufacturer. In the case of one engine change in one car of the General Motors of Canada line, the cost worked out at $9 per car. The same change in the same car in the United States, because of volume production, cost less than $1 per car. When we changed the fenders of the McLaughlinBuick in Canada it cost us $120,000 for a set of fender dies, which worked out at the rate of $12 a car for the 10,000 Canadian cars manufactured. The cost of a similar set of fender dies in the United States was spread over a production of 200,000 cars, or at the rate of much less than $1 a car. We have machinery as good as can be found anywhere, and we can produce the individual article as cheaply as it can be produced anywhere if we have the volume, but low costs are impossible in the case of fenders when six hours are consumed setting up the dies for a run of four days and then six hours more for another brief run on other designs.
The enormous cost of machinery that is at work only part of the time can be readily appreciated from an inspection of our own stamping plant in Oshawa. That building was erected at heavy cost, and the machinery with which it is equipped is most complete. It is fair to say that there is no finer plant or equipment in the world; it was essential to go the limit in expensive equipment in order to be able to manufacture economically. But, just as diea for fenders have to be discarded frequently, there is a heavy loss on plant and machinery from periods of enforced idleness due to the seasonal nature of demand and other market limits. Do these things not help to explain the disappearance of many automobile factories from the industrial picture? Do they not explain sufficiently why it costs more to manufacture cars in Canada than in the United States?
Nevertheless we endeavor to develop the made-in-Canada ideal. For example, we are making our Chevrolet engines in Walkerville, axles at our McKinnon plant in St. Catharines; we are making our radiators, and working on the manufacture of steering columns; fenders we make wherever the quantity justifies it; and we are making practically all our own bodies in Canada. The made-in-Canada percentage of our cars is gradually climbing. If our market were broadened we could work up to a still higher percentage.
IT IS practically impossible to view the prospect of automotive manufacturing operations in Canada in the future without giving some thought to tariff conditions.
I have tried to show how easy it would be for United States plants, with their big production and periods of relative slackness, to take care of all motor-car requirements of Canada. The customs tariff of Canada is what should make it impossible for anything like that to happen. If it is desired to build up the automotive industry in Canada, rates of
duty should be adopted that would make it impracticable for any finished cars to be imported into this couñtry. Under such an arrangement, any company desiring to do business in Canada would have to come over and manufacture here, giving additional employment to Canadians. The industry here is already of such magnitude that competition would always be keen, and with the increased output for Canadian plants that would ensue, cars could be produced and sold more cheaply than at the present time. That seems a desirable end. Yet the industry has been operating in Canada under a protective tariff which is lowest of any country where a serious attempt is being made to manufacture cars.
The tariff rates of several countries might be cited. Even in so-called Free Trade England the general tariff on cars is 33 per cent, while in Canada the rate imposed on passenger cars up to $1,000 is only 20 per cent, and only 27 y2 per cent on cars over that figure. It is interesting to see what customs duty is paid on a Chevrolet car upon being imported into countries where cars are made. It figures out like this:
‘England............... 22 2-9%
‘France................. 59.2 %
United States........... 25 %
‘Czechoslovakia . 48.4 %
Canada................ 20 %
‘Figures in this table take into consideration tariff preference given Canada, and are therefore lower than the general rate.
The Case of Australia
JET us give separate consideration to the case of Australia, a country where they are attempting to make cars, and where many parts are manufactured. In Australia they wanted to make the bodies for all their imported chassis, and they proceeded to protect that industry to a greater extent than anywhere else in the world. The result is, it is practically impossible for a completed car to be shipped into that country. Under the Australian general tariff, which applies in the case of Canada, the duty on a closed body is £142, 10s; or a rate of 82J-£ per cent ad valorem if the ad valorem rate returns the higher duty.
It might be worth while to cite a few other Australian items. For instance,
springs for chassis are subject to a duty of 7 }4d per pound, or a rate of 97 */£ per cent ad valorem if the latter returns a higher duty. On tires, the duty is 3s 9d per pound, or a duty of 60 per cent ad valorem if the latter returns the higher duty. In other words, Australia is making it impossible for anyone to ship into that country any motor-car parts being manufactured there.
Duties on parts imported by the Canadian automobile manufacturer might also be mentioned briefly, with particular reference to parts which are not made in this country. The public is quite wrong, it may be demonstrated, in believing that imported cars are the only ones which bring the government of the country a revenue. The total duty on individual items which we find it necessary to import in the manufacture of a car in Canada very often exceeds the tariff duty imposed on a finished car of the same kind imported into the country. To illustrate this, I might refer to a single small part of foreign make which we import to manufacture into cars here. When that part comes into the country in a finished car of foreign make, it pays duty of 20 per cent as part of the whole car, but when it comes in separately to be manufactured here the duty collected is several times as great.
The direct contribution to Canadian revenues is large, but the indirect contribution is larger. It was found that the amount paid out by the Canadian motor industry as wages in the manufacture of Canadian cars in the calendar year 1928 was $74,394,825, covering the manufacture of 182,666 cars, or an average of $456 per car. This would indicate that the average disbursement for labor for each car transferred from foreign to Canadian manufacture would support one family from three to four months. In other words, every car imported represents three to four months employment which might be given to a Canadian workman but is not.
Besides employing Canadian labor, we endeavor to spend as much money as possible in Canada on material. We (General Motors of Canada) are buying raw material from 600 Canadian and British sources, and have spent as much as $20,000,000 in a single year at these sources. There are some things which we cannot reasonably be expected to buy in Canada. Let me cite the case of certain body metal. A set of dies to turn out the metal for bodies of one car model
alone, for instance the Chevrolet coach, would cost between $300,000 and $400,000. Assuming that from 7,000 to 10,000 coaches are turned out, the cost of the dies alone is about $30 to $40 a car. Since there are six models in the Chevrolet line, it is obviously impracticable to make dies for the sheet metal in Canada, so we import certain large sheet metal stampings; making all our own woodwork and minor stampings, however, and constructing practically all of the body here in Oshawa.
Manufacturing is not the only costly part of the business. Marketing is expensive, too. The population of Canada, spread out over 3,000 miles, is less in the aggregate than can be reached on a fivecent ride in the New York area. Moreover, Canada has no sunny South to insure an all-year-round selling season.
'"PHERE remains that question, men-*• tioned at the start of this article, about changing styles and the low tradein value of practically new cars. In the first place, let me say that motor manufacturers now do not consider it economically sound to buy a car this year and turn it in the next. The car, for all practical purposes, runs as well the second year as it does the first. Yet from the standpoint of the retail dealer, that car is far from being as good at the end of the first year as when it came from the factory, and the explanation is simple.
The instant a car is driven home by a purchaser, a part of that car's valuation equal to the difference between the wholesale price and the retail price simply vanishes. When he returns in a year and desires to trade in his car, the consumer should figure first that the dealer can get a new car for a considerable sum less than the retail price and then he should make a further allowance for the year’s depreciation. That is why a trade-in after the first year involves a disadvantage to the owner. Actually if a dealer bought back a car for the retail price, less only a year’s depreciation, he would be giving away his whole commission.
I wish it were as easy to explain certain other mystifying things about motor cars and the charges that are imposed on them. I wish, for instance, I knew why motor cars ove’’ $1,200, and playing cards, and a few other things, remain practically the only articles on which Canada imposes the so-called luxury tax. I wish I knew just what constitutes a luxury. There is no tax on diamonds, not even a customs duty on importation. Are diamonds to the people who wear them as useful or as necessary as cars are to the people who drive them?
Better Value Than Ever
NOW a word about the mechanical developments that come to light as we look back over the records of the first twenty-five years of our Canadian industry. People laugh when they see pictures of the older cars with the controls on the outside along with the rubber bulb for blowing the horn. But it was only about 1912 that the control levers, chiefly because of the advent of fore-door construction, were moved to a convenient position inside the driving compartment, and enclosed in a boxlike affair “so that they would not chafe the driver’s limbs.” It is interesting also to recall how recent an innovation is the self-starter.
The development of higher driving speed with safety has been a gradual thing. Back in 1908 we were very proud of our stock cars that could do a mile in 1.12 on the Montreal half-mile track. A
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year later in long runs we were boasting of a mile in fifty-eight seconds and a rate of seventy miles an hour on smooth straightway stretches at courses like that of Savannah, Georgia.
Mileage to the gallon of gasoline gradually increased with engineering skill and knowledge, and serviceability of cars generally was developed rapidly. Twenty years ago an owner would boast of a car’s “long life” with a mileage on his speedometer that scarcely sees a car “broken in” today.
And so the automobile manufacturing business in Canada in its first twenty-five years has built up a worthy record. I have every confidence that the record in the next twenty-five years will be as good.
The present spirit of the industry is perhaps best exemplified by the fact that the new models are being brought out as usual and that these new cars are better value than ever. The cars in the lower price field are longer in wheelbase, roomier and finer, with engines better and more reliable than ever. There has been a noticeable multi-cylinder trend in recent years. First, the one-cylinder car, then the two-cylinder, and then the four. The two-cylinder engine dropped out and we ourselves have dropped the four. Sixcylinder engine is now the type mostly used, though the eight-cylinder is growing in popularity and use. Cadillac, though first to bring out an eight, is now manufacturing a twelve-cylinder as well as a sixteen-cylinder car. Makes other than our own also have sixteen-cylinder models. This simply represents an effort to provide a car for every motoring need, and to give dollar value in every case that will have an appeal for purchasers of all classes.
I have said before that Canadians are beginning to realize the meaning of the term “co-ordinated transport,” which would embrace railroads, steamships, motor vehicles, aircraft and even horse transport; all working together to supply without undue overlapping a national transportation system which comes close to being an economic unit. In such a transportation system we feel that motor vehicles play a leading, if not the most important part, and the Canadian automotive industry must continue to increase its contribution to the co-ordinated transport of the future. I do not think it is too much to say that only made-in-Canada automobiles can play the proper rôle in
this development. It is an actual fact] that Canadian car buyers are most discriminating and exacting. They want high-grade finish and equipment and the best quality throughout. It is a high ideal which seeks to supply the Canadian consumer with the car he wants and to build it wholly in this country. To the attainment of that ideal, as the industry in Canada enters its second quarter century, I like to feel that I am lending all my energy and support.
Editor’s Note: For the benefit of students of Canadian poetic endeavor, the verses which appear on the calendars reproduced on page 10 of this article are herewith appended:
An automobile of the latest design Its use I will never disparage
But for comfort and pleasure pray give me for mine A McLaughlin reliable carriage.
The foremost picture shows a rig Just as our buggies are
And in the distance, speeding down,
A giant motor ca'.
In number two they both collide,
As may be well discerned;
The carriage will not be denied—
The car is overturned.
In figure three the ladies’ grief No poet’s pen can tell;
The lady in McLaughlin’s rig
Waves them a fond farewell.
What other buggy could come through So strenuous a test?
It only proves our trade-mark true “One grade and that the best.”
The sun was shining brightly on a summer day in June,
When the happy wedded couple started on their honeymoon;
And a very cogent reason for their happiness is seen,
For they both begin their journey in a “Model Seventeen.”
It is thus in every journey—nothing) ill can e’er befall.
While McLaughlin-Buick motor cars bring happiness to all.