Committee Notes: Industry – The Automotive Sector in Canada

From the 10th meeting of the Standing Committee on Industry, Science and Technology held June 8, 2006:

The automotive industry in Canada is mighty important, says the president of a group which represents Ford, Chrysler, and GM on the Hill:

Mr. Mark Nantais (Canadian Vehicle Manufacturers Association): We have roughly 570,000 jobs that are directly or indirectly related to the automotive industry in Canada. We are the largest manufacturing sector. We account for a trade surplus of roughly $6.5 billion of a $22 billion trade surplus with the United States. Certainly, when it comes to CVMA member companies, we procure about $40 billion from Canadian sources, which is roughly three times what the entire federal government purchases on an annual basis. As an industry, we represent roughly 11% or 12% of manufacturing GDP.

David Adams is the president of the group which represents foreign nameplates like Toyota and Honda. He agreed with much of what Nantais had to say but was at pains to point out to the committee that his members are net benefit to Canada and to the industry:

Mr. David Adams (Association of International Automobile Manufacturers of Canada): With respect to globalization, the automotive industry is perhaps the most global of all industries. Globalization is viewed as having a negative effect on Canada's automotive industry. However, the numbers do not necessarily bear this out.

    Capital investment in Canada has been fairly consistent at about $3 billion a year for each of the last seven years. Direct employment in the parts and assembly sector has been relatively stable at about 150,000 for the past five years. And the figure of 148,250 employed in 2005 is about 11% higher than the 133,181 employed in 1995. Vehicle production has been relatively stable at about 2.6 million units for the past five years, and Canada has held on to about a 16% share of North American production over that timeframe.

    Vehicle sales have been relatively stable as well at about 1.55 million units over the past five years. That is not to say there is not significant transition taking place in the industry and in the different sectors and manufacturers within the industry. The challenges currently facing the traditional North American manufacturers are well documented and likely to persist, at least for some time. Again, however, the health of much of the parts manufacturing community is pinned on General Motors, Ford, and to a lesser extent DaimlerChrysler, pushing through their current challenges.

….A more telling statistic is Canada's auto parts trade deficit with Japan. The deficit last year was about $1.7 billion, which is almost exactly the same as it was in 1996, despite the fact that automotive production from Japanese companies in Canada has increased 140%, from about 366,000 units to about 881,000 units last year. It is clear, then, that a lot more parts sourcing is being conducted by these companies in Canada and the United States.

 

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